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The OFT proposes to launch a market study into residential property management services - such as maintenance, cleaning or building work - for leasehold homes in England and Wales.

Ahead of its proposed market study, the OFT wants to hear from interested people and businesses about the priority areas of concern that may be preventing this market from working well for consumers. The OFT is seeking views about the scope of the proposed study from anyone who uses or provides residential management services, including trade associations, property managers, consumer groups and individuals.

Property management is the operation, control and oversight of a shared property, including the provision of maintenance, cleaning or building work. Property management companies may provide the services themselves or through contractors. Residents typically pay via a service charge and may also pay regular installments into a 'sinking fund' to cover other significant expenses, such as roof maintenance.

The OFT is particularly interested in:

• Whether leaseholders feel that they have sufficient involvement in decisions taken about appointing managing agents, and if it is difficult to establish whether the property manager is providing value for money or a sufficient standard of service.
• Whether property managers and freeholders have the same interests as leaseholders in, for example, keeping down costs of maintenance work or buildings insurance.
• Whether there is effective competition, including evidence about how easy it is to switch between providers.
• Whether residents receive good value for money and reasonable quality of service.
• The time, effort and resources required to complain and seek redress.

An important part of the property management market concerns the management of retirement properties. The OFT is particularly concerned to examine whether residents of such properties, some of whom may be in a particularly vulnerable position, are getting a fair deal.

Cavendish Elithorn, OFT Executive Director, said:

'This market is significant, with as many as five million people living in leasehold properties. Costs can be very substantial and we have been provided with a number of examples showing significant financial impact on individual residents and the difficulty in exerting control over the process.

'However, before formally launching our study we want to hear from key players and interested parties in this sector, as well as from the residents themselves, so we get a clear idea of the areas on which we should be focusing.'

The OFT intends to commence the market study in early 2014.

For more information including the scoping document, see the market study page.

NOTES

1. In February 2009, the OFT published a study into the Scottish property management market, which found that the market was not working well for consumers in Scotland.
2. The following are not within the currently proposed scope:
   
   - management services for commercial properties
   - services provided by registered providers of social housing
   - letting agents
   - land management services
   - an assessment of the legal framework that underpins freehold and leasehold arrangements in England and Wales (we will consider the leasehold and freehold relationship, but only insofar as it impacts on the supply of property management services) 
   - services in Scotland and Northern Ireland where different legal frameworks apply.
3. OFT market studies are carried out under section 5 of the Enterprise Act 2002 (EA02) which allows the OFT to obtain information and conduct research. Effectively, they allow a market-wide consideration of both competition and consumer issues. They take an overview of regulatory and other economic drivers in the market and consumer and business behaviour. Possible outcomes of market studies include: enforcement action by the OFT, a market investigation reference to the Competition Commission (CC), recommendations for changes in laws and regulations, recommendations to regulators, self-regulatory bodies and others to consider changes to their rules, campaigns to promote consumer education and awareness, or a clean bill of health.
4.  In April 2014, the Competition and Markets Authority (the CMA) will become the UK's lead competition and consumer body. The CMA will bring together the existing competition and consumer protection functions of the Office of Fair Trading and the responsibilities of the Competition Commission, as amended by the Enterprise and Regulatory Reform Act 2013. The CMA, which is a non-Ministerial government department, was established on 1 October 2013 and will be taking on responsibility for cases and market studies from 1 April. See the CMA's home page for more information.