Quick Answers
Is there a qualification managing agents must hold?
No — there is currently no statutory requirement for managing agents to be qualified or regulated. Anyone can set up as a managing agent. Professional membership of ARMA or IRPM is voluntary but meaningful. Regulation is expected under the Leasehold and Freehold Reform Act 2024 — but the timetable is unclear.
Can RTM directors fire their managing agent?
Yes. The RTM company appoints and removes the managing agent — that is the point of RTM. The existing contract will specify a notice period, typically one to three months. The outgoing agent must hand over all funds, documents, and compliance records. You do not need the freeholder's permission.
What does a managing agent actually do?
Day-to-day: maintenance coordination, service charge collection, contractor management, leaseholder communication, and compliance calendar management. Strategic: reserve fund planning, major works procurement (Section 20), annual accounts, and keeping the RTM company directors informed and legally protected.
The short answer: A good managing agent does three things well — keeps the block compliant (safety certificates, service charge law, Section 20 consultation), keeps the finances transparent (clear accounts, properly held funds, reserve fund planning), and keeps RTM directors informed and protected. Most complaints about managing agents come down to failures in one of these three areas: something was missed, money was not accounted for clearly, or the directors were kept in the dark until a problem became a crisis.
The honest context: the residential block management sector is largely unregulated, and the quality gap between competent and incompetent agents is enormous. The questions below are designed to surface that gap before you appoint — or to help you decide whether it is time to switch.
Why the Choice of Agent Matters More Than RTM Directors Often Realise
RTM directors are personally responsible for the decisions the RTM company makes — including decisions made on their behalf by the managing agent. If the agent fails to carry out a Section 20 consultation and the RTM company is left with a £40,000 shortfall it cannot recover from leaseholders, that is the RTM company's problem. If the agent fails to renew a gas safety certificate and a leaseholder suffers harm, the RTM company may face liability. If the agent holds service charge funds in a general account rather than a designated trust account, the directors could face regulatory scrutiny.
RTM directors who adopt a passive relationship with their managing agent — who assume that because someone else is handling it, they bear no responsibility for what happens — are taking a significant risk. The Right to Manage transfers management responsibility to the RTM company. That responsibility does not transfer back to the managing agent when things go wrong.
The ten questions below are the ones we think every RTM director should be able to answer about their current agent — or ask before appointing a new one.
The 10 Questions
Are you a member of ARMA or IRPM — and if not, why not?
ARMA (Association of Residential Managing Agents) and IRPM (Institute of Residential Property Management) are the two main professional bodies for residential block management. ARMA membership requires agents to comply with a consumer charter and code of practice that go beyond the statutory minimum — covering transparency on service charges, insurance, and conflicts of interest. IRPM qualifies individual property managers to a defined professional standard.
Neither is legally required. But an agent who is not a member of either, and cannot explain why, is telling you something about how seriously they take professional standards in an unregulated industry.
Who is our named contact, and how many units are they responsible for?
This is a more revealing question than it appears. Many managing agent firms win business on the strength of a senior director's pitch and then assign a junior property manager who is stretched across too many blocks to give any of them proper attention. The named contact is the person who will actually be running your block.
There is no fixed rule on caseload, but a property manager handling more than 300–400 units across multiple complex blocks is likely to be reactive rather than proactive — dealing with what is urgent rather than managing what matters. Ask specifically about units, not blocks — a portfolio of fifty two-flat conversions is very different from ten blocks with lifts and large service charge budgets.
How do you hold service charge funds — and can we see the trust account?
Service charge money belongs to leaseholders. It must be held in a designated client account — separate from the agent's own business funds — on trust for the leaseholders. This is not optional; it is a legal requirement under the Landlord and Tenant Act 1987. An agent who holds service charge money in a general business account is in breach of the law, and if that business fails, leaseholders may lose their money.
Ask to see evidence that a designated trust account exists for your block, and confirm that service charge receipts are paid into it directly. Ask also about the interest on the account — under ARMA's consumer charter, leaseholders are entitled to interest earned on their service charge funds.
How do you manage the Section 20 consultation process?
Section 20 is where agents most commonly create serious financial liability for RTM companies. A failure to consult — or a consultation carried out incorrectly — caps recovery at £250 per leaseholder regardless of actual works cost. On a block of 20 flats facing a £60,000 roof replacement, that is a potential £55,000 unrecoverable shortfall.
Ask specifically how the agent tracks the £250 threshold, what their process is for the Notice of Intention and Statement of Estimates stages, how they handle leaseholder nominations, and whether they manage the consultation in-house or use solicitors for the notices. An agent who cannot give a detailed, confident answer to this question has probably either never dealt with a Section 20 challenge, or has and does not want to talk about it.
When did you last carry out a formal inspection of the block?
A managing agent who does not carry out regular physical inspections is managing the block from a desk — responding to problems that leaseholders report rather than identifying them proactively. For a block with a reserve fund that needs to be accurately forecast, reactive management is not good enough. Roof problems, drainage issues, structural movement, and external fabric deterioration all benefit from early identification — both for budget planning and for avoiding emergency works that bypass Section 20.
Ask when the last inspection was carried out, whether a written report was produced, and what it found. If the agent cannot answer, or if the last inspection was more than six months ago, ask why.
How do you manage the compliance calendar — and what happens when a certificate is about to expire?
Gas Safety Certificates, EICRs, fire risk assessments, lift inspections, asbestos surveys, legionella assessments — each has a renewal frequency and each creates legal exposure if it lapses. A managing agent who relies on contractors to chase renewals, or who does not maintain a compliance calendar, is operating a system that depends on nothing going wrong. Something will go wrong eventually.
Ask to see the compliance calendar for your block. Ask what the process is when a certificate is 60 days from expiry — who flags it, who books the inspection, who confirms it has been done and the certificate served on leaseholders. If there is no documented process, there is effectively no process.
Do you receive any commission or referral fees from contractors or insurers — and do you disclose them?
This is the question many managing agents least want to answer. Commission on buildings insurance — where the agent places cover with an insurer and receives a percentage of the premium — has been a major source of hidden cost inflation in residential block management. The Leasehold and Freehold Reform Act 2024 introduced strengthened disclosure requirements on insurance, but commission arrangements with contractors, surveyors, and other service providers remain common and often undisclosed.
A managing agent who receives undisclosed commission is creating a conflict of interest that may mean the block is not getting the most competitive pricing for insurance or works. Ask for a written statement of all commission, referral fees, and incentive arrangements the agent receives in connection with the management of your block.
How do you communicate with leaseholders — and what do they say about you?
A managing agent's relationship with leaseholders is the ground-level test of how well the block is being managed. If leaseholders regularly report that their maintenance requests are ignored, that they cannot get a named person on the phone, or that they receive unexplained service charge demands with no supporting information, those are symptoms of a systemic management failure — not individual incidents.
Ask the agent about their average response time for maintenance requests, their communication protocol for major works, and how they handle leaseholder complaints. Then ask a few leaseholders directly. The gap between the two answers is informative.
Can you show us a reserve fund study and explain how the contributions were set?
Reserve fund contributions that are set too low are one of the most common — and most damaging — forms of mismanagement in residential blocks. Leaseholders see low service charges as a sign the block is being run efficiently. What it often signals instead is that the agent is setting contributions to minimise leaseholder complaints in the short term, at the cost of building up a funding gap that will produce an emergency levy when the roof or lift fails.
A reserve fund contribution should be based on a professional assessment of the building's major components — their estimated remaining life and replacement cost — not on a round number that felt reasonable. Ask to see the reserve fund study that underpins the current contribution level. If there is no study, or if the study has not been refreshed in the last five years, the contributions are almost certainly not based on the building's actual cost profile.
What will the handover process look like if we decide to switch agents?
This question is not about planning to leave — it is about understanding what you are agreeing to. A managing agent contract that makes switching difficult, expensive, or slow is a contract designed to lock you in rather than earn your continued business. The notice period, the handover obligations, and the agent's attitude to this question all tell you something important.
A good agent will have a clear handover process — because they have done it before, as an incoming agent who received files from an outgoing one. They will confirm the notice period, commit to handover of the service charge balance, compliance records, and all block documentation, and be straightforward about the process. An agent who becomes evasive or defensive when asked this question is showing you something worth noting.
Red Flags That Warrant Immediate Action
Some issues with a managing agent are worth a conversation and an improvement plan. Others warrant switching without delay. These are the ones in the second category.
This is a legal breach that puts leaseholder money at risk. If the agent's business fails, unprotected service charge funds may be treated as the agent's assets. Act immediately — separate the funds before anything else.
The RTM company may already be exposed to an unrecoverable shortfall. Take legal advice on the position before the next service charge demand is issued — the Tribunal challenge clock may already be running.
A gas safety certificate lapse is a criminal offence for the managing party. An EICR lapse creates immediate civil liability. If the agent did not flag this, the compliance management system is not working — and the RTM directors are exposed.
Leaseholders have a statutory right to accounts. An agent who cannot produce accounts within a reasonable period of the year end is either poorly organised or has something to conceal. Either is unacceptable.
Reserve fund money is held on trust. If the agent cannot produce a clear account of what is in the fund and what it was spent on, there is a funds management problem that must be investigated — not a paperwork issue that can wait.
When to Switch — and How
If the answers to the ten questions above reveal significant problems, the question is not whether to switch — it is when and how to do it in a way that protects the block through the transition.
| Stage | What It Involves |
|---|---|
| Review the existing contract | Identify the notice period (typically one to three months), any conditions on termination, and what the contract says about handover of funds and documents. If the contract is silent on handover obligations, the statutory position under the LTA 1987 applies — the agent must hand over all funds and documents within a reasonable time. |
| Appoint the incoming agent first | Select and agree terms with the new agent before serving notice on the outgoing one. The incoming agent should be available to begin management immediately after the handover period ends — not after a further selection process. |
| Serve a formal termination notice | In writing, to the address specified in the contract. Keep a copy and evidence of delivery. State the termination date clearly. The notice period runs from the date of service, not the date you decided to leave. |
| Manage the handover actively | Request a formal handover pack: service charge account balance, reserve fund balance, compliance certificate schedule, contractor contact list, leaseholder contact details, and all block documentation. Do not assume this will be produced without chasing. Some outgoing agents are slow or obstructive — the incoming agent should support the process. |
| Notify leaseholders | Write to all leaseholders confirming the change of managing agent, the effective date, and the new contact details. Update the service charge demand account details immediately — you do not want payments going to the outgoing agent after the switchover date. |
The most common thing we hear when we take over management of a block is that the previous agent was "fine until something went wrong." That is not a compliment — it means the agent was managing reactively, the compliance calendar was not being actively managed, and the reserve fund was not being planned. Competent block management is mostly invisible: certificates renew on time, accounts arrive on schedule, major works are planned and properly consulted. When you notice your managing agent, it is usually because something has already gone wrong. The blocks we manage should not have that experience.
Frequently Asked Questions
There is no statutory requirement for managing agents to hold any qualification — the sector is currently unregulated, which is a significant consumer protection gap. Professional membership of ARMA or IRPM is voluntary but meaningful — it signals commitment to a professional standard and subjects the agent to a code of conduct.
Mandatory regulation of managing agents is expected under the Leasehold and Freehold Reform Act 2024, but the implementation timetable is not yet confirmed. Until then, ARMA and IRPM membership are the most reliable proxies for professionalism.
The right metric is units managed per property manager, not blocks managed by the firm. A property manager responsible for more than 300–400 units across complex blocks will typically be reactive rather than proactive — managing what is urgent rather than what matters.
Ask specifically how many units your named contact is responsible for, and whether they have dedicated administrative support. A named manager who carries sole responsibility for a large portfolio is a single point of failure for your block.
Service charge accounts should be clear, itemised, and produced annually within a reasonable period of the accounting year end — typically within six months. They should show the general service charge account and the reserve fund separately, with actual expenditure against budget, and supporting documentation available on request.
The Leasehold and Freehold Reform Act 2024 introduced standardised account requirements. Accounts that arrive late, use unexplained lump sums, or consolidate multiple blocks without per-block breakdown are warning signs.
Yes — the RTM company has full authority to appoint and remove the managing agent. Review the existing contract for the notice period (typically one to three months) and serve a formal written termination notice. The outgoing agent is legally required to hand over all service charge funds, compliance records, and block documentation.
Appoint the incoming agent before serving notice so the transition can be managed cleanly. Notify leaseholders of the change and update service charge payment details immediately.
The RICS Code sets out best practice standards for residential service charge management — covering how funds should be held, accounts presented, expenditure authorised, and major works consulted on. Compliance is not legally mandatory, but the Tribunal treats it as the benchmark for reasonable practice.
An agent who is unaware of the Code, or who knowingly departs from it, is more likely to face successful Tribunal challenges on service charge reasonableness grounds. Ask your agent specifically whether they operate in accordance with the Code.
Not confident in your current managing agent?
Neon manages blocks across London and Essex for RTM companies and freeholders who want compliance done properly — Section 20, reserve fund planning, compliance calendars, transparent accounts, and directors who are kept informed. If your current agent is not meeting that standard, switching is easier than you might think.
See how Neon manages blocks →