Quick Answers
What should RTM directors look for in a managing agent?
Financial transparency, compliance expertise, demonstrable responsiveness, verifiable references from comparable blocks, and a clear contract with fair notice terms. The single most important question is where all of the agent's income comes from — not just the management fee.
How much does block management typically cost?
Typically 8% to 15% of the annual service charge, or a flat fee of £200 to £500 per unit per year in London. The headline fee is rarely the full picture — many agents also earn income from insurance commissions, contractor referral fees, and interest on service charge funds. Always ask for full income disclosure.
How long should a block management contract run?
One to three years is standard, with a notice period of one to three months. Avoid contracts with notice periods of six months or more, or those with early termination penalties. A fair contract reflects confidence in performance, not a desire to lock clients in.
The core problem with most managing agent appointments: RTM directors typically make the decision based on the lowest management fee and the most confident pitch. Neither of these things predicts performance. The management fee tells you almost nothing about total cost — an agent charging 8% who also earns a 15% insurance commission and routes maintenance through a preferred contractor network can cost the block significantly more than an agent charging 12% with full fee transparency. A confident sales presentation tells you nothing about what happens after the contract is signed.
What actually predicts a good outcome: verifiable references from current clients managing comparable blocks, a clear and detailed written response to a standard set of due diligence questions, transparent disclosure of all income streams in writing before the contract is signed, and contract terms that give the RTM company a straightforward exit route if performance falls short. These four things, checked carefully, separate genuinely good agents from the majority of the market.
Key Takeaways
The management fee is never the full cost of an agent
Most managing agents earn income from sources beyond the management fee: insurance commissions (paid by the insurer for placing the block's policy), contractor referral fees (paid by contractors in exchange for being on the preferred supplier list), bank interest on service charge float balances, and administration charges for individual tasks. A genuinely transparent agent discloses all of these in writing before the contract is signed. An agent who cannot or will not do this is not operating in the leaseholders' interests.
Compliance knowledge is now a baseline requirement, not a differentiator
The Building Safety Act 2022, the Leasehold and Freehold Reform Act 2024, and the Renters' Rights Act 2026 have collectively increased the compliance burden on residential blocks significantly. Any managing agent appointed in 2026 must demonstrate current, working knowledge of what these acts require in practice — not just awareness that they exist. Ask specific questions: what does the Building Safety Act require for your block's height? When was the last fire risk assessment reviewed? Are the service charge accounts produced within six months of year end? Vague answers reveal the level of competence you will get.
References must be from current, comparable clients
A managing agent who provides references from clients they managed several years ago, or from blocks significantly different from yours (smaller, simpler, or in a different area), is not giving you useful evidence of their current performance. Ask for references specifically from blocks of similar size in a similar location, managed under the current team rather than a team that has since left. Call the reference directly, not by email, and ask specifically about responsiveness, account accuracy, compliance management, and what they would do differently if they were appointing an agent now.
The contract notice period is your most important protection
A managing agent who performs well needs no more than a two to three month notice period to protect their legitimate interests. An agent who insists on six months, twelve months, or who builds in early termination penalties is using the contract to compensate for anticipated poor performance with structural lock-in. Read the termination clause carefully before signing anything. Where the notice period is longer than three months, negotiate it down or walk away. Your ability to exit without penalty is your most valuable leverage over an underperforming agent.
Section 20 compliance must be explicit in the scope of services
Section 20 of the Landlord and Tenant Act 1985 requires consultation with leaseholders before qualifying works above £250 per leaseholder and before entering long-term qualifying agreements. Many managing agents treat Section 20 compliance as optional or proceed with works without proper consultation when it is inconvenient. Before appointing, ask explicitly: how do you handle Section 20 consultation? Who is responsible for issuing the notices? What happens if a contractor you want to appoint is not on the leaseholder-nominated list? The answers reveal a great deal about how the agent actually operates.
Changing managing agents is easier than most RTM directors assume
Many RTM companies remain with a poor managing agent for years because they believe the switching process will be difficult, disruptive, or expensive. In practice, a well-managed handover takes four to eight weeks and, if handled correctly, involves no disruption to leaseholders or maintenance services. The incoming agent takes over the service charge accounts, the leaseholder register, the compliance documentation, and the maintenance contracts in sequence. RTM directors who are dissatisfied with their current agent should not allow fear of change to keep them locked into poor service.
What a Managing Agent Actually Does
A managing agent acts as the operational arm of the landlord or RTM company, carrying out the day-to-day management of the building and the service charge on their behalf. Their responsibilities typically cover:
- Maintenance management: arranging routine maintenance, responding to reactive repair requests, and managing contractors. In a well-run block, this means a planned maintenance schedule rather than a permanent cycle of reactive firefighting.
- Service charge management: setting the annual service charge budget, collecting contributions from leaseholders, paying contractors from the service charge account, and producing annual accounts within the required timeframe.
- Compliance management: ensuring the building meets its legal obligations — fire risk assessments, asbestos management, lifts, electrical installations, health and safety documentation, and (for blocks within scope) Building Safety Act requirements.
- Leaseholder communication: responding to leaseholder queries, issuing service charge demands correctly, handling breach notices, and managing the relationship between the RTM company and the people who live in the building.
- Corporate administration: for RTM companies, filing confirmation statements at Companies House, maintaining the statutory register, and preparing for and minuting AGMs.
The scope of what is included in the management fee versus what is charged additionally varies enormously between agents. Clarifying exactly what is and is not included is essential before signing any contract.
10 Questions to Ask Every Managing Agent You Evaluate
These questions should be put to every agent in writing before any in-person meeting. Written responses allow you to compare agents systematically and create a record of what was promised before the contract was signed.
A transparent agent discloses insurance commissions, contractor referral fees, bank interest, and any other income stream. Any reluctance to answer this question fully is a significant red flag.
The person who pitches your account is often not the person who manages it. Ask for the name and caseload of the property manager who will handle your block day to day. A caseload of more than 15 to 20 buildings per manager is a warning sign for responsiveness.
Comparable means similar in size, location, and complexity. Ask for current clients, not historical ones, and call the references rather than emailing them.
This reveals whether the agent has a real Section 20 process or whether they manage major works informally and retrospectively justify it as an emergency.
The Leasehold and Freehold Reform Act 2024 requires accounts within six months. An agent who routinely produces accounts nine to twelve months later is already non-compliant with the new standard.
Preferred contractor networks are common and not inherently wrong, but any financial relationship between the agent and the contractor must be disclosed. Undisclosed referral fees are a breach of the agent's duty to the leaseholders.
Ask for specific metrics, not general assurances. An agent who cannot tell you their average response time does not measure it, which means they have no accountability mechanism for performance.
Ask for a line-by-line breakdown of what is in scope for the management fee and what triggers additional charges. Common additional charges include major works project management, attendance at more than one AGM per year, lease enforcement, and out-of-hours call-out.
The answer to this question, more than any other, reveals how confident the agent is in their own performance. A fair contract has a notice period of one to three months with no penalty for early termination.
TPI membership (The Property Institute — the professional body formed by the merger of ARMA and IRPM) is the most relevant indicator of professional standards for a residential managing agent. Be aware that some agents cite RICS as a credential — RICS is the professional body for surveyors and valuers, not managing agents, and RICS membership alone says nothing about the firm's competence or conduct as a block manager. Client money protection is not optional — service charge funds must be held in a separate protected client account, not in the agent's general operating account.
Red Flags That Should End the Conversation
Some responses to the questions above are not just disappointing — they indicate an agent you should not appoint under any circumstances.
An agent who will not tell you in writing where all of their income from your block comes from is concealing conflicts of interest. There is no legitimate reason for this refusal. Walk away.
These contract terms exist to make it costly for you to leave when the service falls short. A confident agent with nothing to hide does not need contractual lock-in to retain clients.
If the agent cannot tell you who your dedicated property manager will be, they are likely to assign your block to whoever has capacity at the time — meaning you have no continuity of relationship and no accountability for performance.
Service charge funds held in an agent's general operating account — rather than a designated client account — are at risk if the agent becomes insolvent. This is a fundamental professional standard failure and an immediate disqualifier.
Property management is not a licensed profession in England — anyone can set up as a managing agent without qualification or oversight. TPI (The Property Institute) is the main professional body for residential managing agents, formed by the merger of ARMA and IRPM. TPI membership, and staff holding TPI qualifications, are meaningful indicators that the firm operates to a defined professional standard and is subject to external oversight. One common piece of misdirection to watch for: some agents cite RICS membership as evidence of professional credibility. RICS is the professional body for surveyors and valuers — it is not specific to block management and RICS membership does not demonstrate competence as a managing agent. If an agent leads with RICS when you ask about professional qualifications, ask specifically about their TPI membership instead.
What a Good Agent Looks Like vs a Poor One
A well-run managing agent
- Discloses all income sources in writing before the contract is signed
- Names the specific property manager responsible for your block
- Provides references from current comparable clients — and you can call them
- Produces service charge accounts within six months of year end
- Follows a documented Section 20 process for qualifying works
- Holds service charge funds in a protected client account
- Offers a notice period of two to three months with no penalty
- Responds to maintenance requests within agreed timeframes — and tracks this
A poor managing agent
- Cannot or will not disclose insurance commissions and contractor referral fees
- Cannot name who will manage your block day to day
- Provides references from past clients or blocks in different circumstances
- Produces accounts nine to twelve months after year end, or not at all
- Treats Section 20 as an administrative inconvenience to be worked around
- Mixes client funds with their own operating account
- Insists on a six-month notice period or early termination fees
- Has no measurable response time standard for maintenance
Reading the Management Contract
Before signing any block management contract, RTM directors should read four sections carefully: the scope of services, the fee structure, the termination clause, and the exclusions list.
Scope of services
What is included in the management fee should be listed in detail. If it is described in general terms ("management of the property"), ask for a service level agreement specifying exactly what tasks are included and at what frequency. Vague scope language is always interpreted in the agent's favour when a dispute arises.
Fee structure and additional charges
The management fee is typically expressed as a percentage of the service charge or as a fixed fee per unit. Read the additional charges schedule carefully — this is where agents recover costs for tasks that are not covered by the headline fee. Common legitimate additional charges include major works project management and legal costs for breach proceedings. Common illegitimate or excessive additional charges include basic administration tasks, individual letter production, and attendance at more than one meeting per year.
Termination clause
The notice period, the process for terminating, and any conditions attached to early termination are critical. Check whether the agent retains any documents, records, or funds after termination and what their obligations are during the handover period. A good contract requires the outgoing agent to cooperate fully with the incoming agent and transfer all documentation promptly.
Exclusions
The exclusions list defines what the agent is not responsible for. This is often where RTM directors are surprised later — if major works project management, lease enforcement, or out-of-hours emergency response are excluded from the scope, the RTM company either manages these itself or pays additional fees for every instance.
For the service charge account standards that apply from 2024, see Service Charge Accounts Under the Leasehold and Freehold Reform Act 2024. For Section 20 consultation requirements for major works, see Emergency Works and Section 20 Exemptions. For what to do when a managing agent is underperforming, see How RTM Companies Can Remove a Non-Performing Managing Agent.
How to Switch Managing Agents Without Disruption
The most common reason RTM companies stay with a poor managing agent is fear of disruption during a switch. In practice, a well-managed handover is straightforward:
- Serve notice on the outgoing agent in writing, in accordance with the contract termination clause. Confirm the handover date.
- Appoint the incoming agent before the notice period expires so they can prepare for the handover. Brief them on the block's history, outstanding issues, and leaseholder concerns.
- Request the handover pack from the outgoing agent: service charge accounts, leaseholder register, compliance documentation (fire risk assessment, asbestos management plan, EPC, lift inspection records), maintenance contracts, and the key register.
- Transfer the service charge account funds and banking mandate to the incoming agent's client account. Confirm in writing that all funds are accounted for.
- Notify leaseholders of the management change with the new contact details for the incoming agent. Do this in writing to all leaseholders simultaneously.
A clean handover typically takes four to eight weeks. The outgoing agent is legally obliged to provide all documentation and funds promptly — if they delay or obstruct, take legal advice on enforcement.
The first ninety days with a new agent are when the most visible improvements happen: outstanding maintenance items are addressed, contractor relationships are reviewed, and service charge accounts are brought up to date. If things do not improve visibly within the first quarter, the problem is not the previous agent — it is the new one. Set clear expectations in the first meeting and review progress formally at ninety days.
Frequently Asked Questions
Five things matter above all others: financial transparency (full disclosure of all income, not just the management fee), compliance capability (demonstrable current knowledge of building safety, service charge, and licensing law), responsiveness (specific measurable response times, not general assurances), verifiable references from current comparable clients (called, not emailed), and contract terms with a fair notice period and no early termination penalties. An agent who is strong on all five is rare — which is why due diligence takes time and why the lowest management fee is almost never the right selection criterion.
In London, block management fees typically range from 8% to 15% of the annual service charge, or £200 to £500 per unit per year as a flat fee. The headline fee is rarely the full picture. Many agents earn additional income from insurance commissions (10% to 20% of the premium), contractor referral fees paid by suppliers on the preferred contractor list, bank interest on service charge float balances, and per-task administration charges. A transparent agent will disclose all of these in writing before the contract is signed. An agent who cannot provide this disclosure is operating in a way that puts their interests ahead of the leaseholders' interests.
A comprehensive block management contract covers routine maintenance management, reactive repairs, service charge budgeting and collection, preparation of annual accounts, Section 20 consultation for qualifying works, health and safety compliance, Companies House filing for RTM companies, AGM attendance, and leaseholder communication. Frequently excluded are: major works project management (usually charged as a percentage of the contract value), legal proceedings for lease enforcement, attendance at more than one AGM per year, and out-of-hours emergency call-out. Read the exclusions list as carefully as the inclusions — the gap between the two is where unexpected additional costs accumulate.
One to three years is standard, with a notice period of one to three months on either side. Longer contract terms are not necessarily better — a two-year contract gives the agent enough time to establish their management approach and the RTM company a reasonable window to assess performance, while a three-month notice period provides a workable exit if performance falls short. Be cautious about contracts requiring six months notice or more, or those that include early termination fees — these terms serve the agent's interests at the RTM company's expense and suggest an agent who expects to underperform.
Yes — self-management is legally permitted and can work well for small, straightforward blocks where the RTM directors have the time, expertise, and appetite for the administrative workload. In practice, self-management becomes significantly more challenging for blocks over six or eight flats, for buildings with complex compliance requirements under the Building Safety Act, and in areas with extensive licensing obligations such as East London where selective and HMO licensing adds further administrative demand. For most blocks above this threshold, the cost of professional management is justified by the reduction in directors' personal liability exposure and the administrative burden removed from volunteers who have their own jobs and lives to manage.
Evaluating managing agents for your block?
Neon manages residential blocks across East London and Essex. We answer every question on this page in writing before any contract is signed — because transparency is not a selling point for us, it is how we operate. If you want to talk through what good block management looks like for your specific building, get in touch.
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