Strengthening leaseholder protections over fees, charges and services: consultation

4.4 New Qualification requirements

i) Scope of qualification requirements

313. The qualifications element of Lord Best’s report focused principally on the qualifications of individual agents, since in practice only individuals may hold qualifications. The report recognised that there is a principle across regulated professions that recognises individual responsibility. We agree that it is right that individuals are accountable for achieving qualifications.

314. However, as Lord Best’s report recognises, there are also important firm level responsibilities. The performance of companies that provide managing agent services is as important as that of the individuals who work for them. Companies create the culture in which individual agents operate – through the corporate structure that is in place, the internal policies by which their staff must adhere, and their approach to training and development. We think that is therefore a strong case for including the regulation of firms – as well as individuals - within the scope of future legislation through making managing agent firms responsible for ensuring that their staff are trained to the required level. This could be implemented in addition to individual level accountability. We are keen to hear from the industry and from interested stakeholders how this might be achieved without putting significant burdens on the firms concerned and whilst ensuring a sustainable sector.

315. We believe that in general estate managers on freehold estates should be subject to the same requirements as those managing leasehold blocks. In coming to this view, we have taken account of the similarity of the work and the fact in many cases the same firms undertake both activities. We welcome views about whether this is appropriate or if there are any other considerations of which we should take account of.

ii) Level of qualification

316. The scope of work that managing agents carry out is extensive, ranging from procuring minor maintenance and repairs to ensuring the building safety of high-rise residential blocks. It is also subject to change over time as new technologies are developed and new regulations introduced. In addition, managing agents can be responsible for substantial budgets including sinking funds and the management of major works contracts. We consider that the level of a qualification should be appropriate to the work which an individual managing agent undertakes.

317. We consider that the functions of a managing agent may be broken down into a number of core functions. These include:
     1. Day-to-day liaison with clients, including voluntary and Recognised Tenants Associations;
     2. Managing property disputes and terminations - managing disputes between occupiers, dealing with complaints of noise or other anti-social behaviour in breach of leases, dealing with terminations of contracts;
     3. Handling statutory requests – for example, dealing with lease extensions or variations, dealing with any breach of covenant.
     4. Financial obligations – a wide range of functions including opening bank accounts on trust; preparing service charge estimates and budgets; managing service charge monies and reserve funds; collecting service charge and ground rent contributions; collecting arrears; providing copies of relevant financial documents; processing payments.
     5. Insurance – advising, arranging and/or administering buildings insurance policies and renewals and/or handling associated claims; Instructing the preparation of reinstatement cost protection for insurance valuation purposes;
     6. Building Management – dealing with repairs, maintenance, renewals and improvements; entering into and managing contracts on behalf of the landlord; complying with statutory requirements (e.g. on major works process); inspections of the common parts and other parts of the building; Engagement with the landlord on management issues;
     7. Managing fire and health and safety issues – engaging with people qualified to carry out mandatory health and safety and fire safety inspections, and fire risk assessments;
     8. Providing sales and purchase information – including offering vacant properties for let and dealing with pre-contract sales enquiries.
     9. Carrying out company secretarial services – including preparing papers for and attending board meetings and Annual General Meetings, maintaining company registers;
     10. Complying with obligations under the Building Safety Act 2022 (or equivalent future Building Safety legislation in Wales) – engaging with the Accountable Person and other relevant qualified person(s) to ensure relevant documents and procedures are prepared on time (e.g. Building Safety Case, Residents Engagement Strategy, complaints procedure), ensure appropriate surveys are carried out, manage or advise on applications for building assessment certificates, ensure compliance with other relevant obligations.
318. Lord Best’s 2019 Report developed a consensus that all property agents (a term which covers estate, letting, and managing agents) must be qualified to a minimum of level 3, but that managing agents of leasehold blocks should be qualified to a minimum of level 4, equivalent to the 1^st year of a bachelor’s degree, using the Office of Qualifications and Examinations Regulation (Ofqual) Regulated Qualification Framework. The requirement for a level 4 qualification for managing agents recognised the complex aspects of their role in leasehold block management.

319. Many managing agents undertake functions that the UK government believes require a level 4 qualification. These functions (non-exhaustive) include: agreeing contracts and charges for property management services; advising landlords on matters such as lease assignments, extensions and variations; working with local and statutory authorities regarding operation or amendment or improvements to communal services; arranging buildings insurance; organising consents for the operation or amendment of common services; preparing or procuring the preparation of schedules of dilapidations of individual dwellings; ensuring compliance with fire regulation and health and safety requirements including arranging periodic inspections of fire prevention facilities; ensuring that landlords of higher risk buildings are in compliance with their responsibilities under the Building Safety Act 2022 (or equivalent future responsibilities in Wales).

320. However, we recognise that there may be some managing agent roles with lesser levels of responsibility or complexity that require people to undertake a lower level of qualification, e.g. Level 3 (equivalent to A-Level), in particular where staff are not performing the types of complex functions set out in the preceding paragraph.

321. We also recognise that there may be some roles within managing agent firms that require significantly higher levels of responsibility, such as a Company Director, and which might require a high level of qualification, e.g. Level 5 (equivalent to the second year of a bachelor’s degree).

322. We agree with the conclusions of Lord Best’s report and propose that as standard all managing agents should be qualified to level 4, with exceptions where the role has more or less responsibility. The UK government plans to work collaboratively with stakeholders to develop a comprehensive list of managing agent functions that require qualifications at different levels. We welcome views through this consultation about the level of qualification required for key managing agent functions.

323. In creating this proposed level of qualification, we are keen to ensure consistency with work to drive up standards of professionalism in the social housing sector in England. We are aware that in some blocks, including those primarily managed by social landlords, managing agents may provide services for both leaseholders and social housing tenants. It is important to ensure that any measures we bring forward on managing agent regulation take full account of other legal or regulatory requirements, including competence and conduct requirements proposed for the social housing sector in England under the Social Housing (Regulation) Act 2023.

iii) Course content and qualification providers

324. There are already a number of qualification and training providers in the property management agent industry. We recognise that many of these courses are delivered to a high standard and that some of these courses offer all or some of the skills that managing agents require to operate effectively.

325. We agree with the conclusion of Lord Best’s report that it is important to maintain a diverse range of qualification providers to ensure competition over cost and quality. There are existing providers which offer courses in leasehold property management which provide the requisite skills that managing agents require to perform effectively. We would work with existing providers and other key stakeholders to develop the key topics and areas that courses should cover. In our preferred option (as set out in the enforcement section below), UK government would ask designated professional bodies to lead the enforcement of mandatory professional qualifications. As part of this role, UK government could also ask the designated professional bodies to agree course content requirements that courses must meet to provide managing agents and estate managers of freehold estates with the required skills and knowledge to perform effectively. As a minimum, and as recommended by Lord Best’s Report, we expect that the syllabus should cover technical skill, consumer relations, safety and ethical behaviour.

326. It is important that qualifications offered are of a sufficient quality. We agree with Lord Best’s recommendation that the Office of Qualifications and Examinations Regulation (Ofqual) can play a role in ensuring the quality of qualifications. We suggest that we require that qualifications are an Ofqual-regulated qualification, regulated through the Scottish Qualifications Authority, Qualifications Wales or the CCEA, or regulated through an equivalent regulatory system.

327.  Any provider who wishes to do so should be able to deliver the qualification if they do so to the required standard, the course content covers the right topics, and they have appropriate accreditation.

328. We welcome views on how best to ensure high quality qualifications and consistency across providers.

iv) Continuing professional development

329. Continuing Professional Development (CPD) is a feature of many professions. CPD is critical to ensuring managing agents continue to learn and retain relevant skills, and it is important that individuals, and firms that employ them, ensure that skills remain up to date.

330. We are interested in views about whether a requirement for managing agents to undertake a certain level of CPD should be set, in addition to requirements for agents to achieve a minimum qualification, or whether the promotion of CPD should be left for firms and individuals to determine. We are mindful of the risk that setting an arbitrarily high number of hours of CPD could lead to agents having less time to focus on their role.

331. We also recognise that the ease of enforcing any CPD requirement would vary depending on the approach to enforcement taken. Enforcement issues are discussed in the section below.