In the leasehold sector, price has always mattered. Directors have a duty to be cost-conscious, and leaseholders rightly want to know their money is being spent carefully. But in recent years, one thing has become increasingly clear in that the cheapest managing agent is rarely the safest choice.
This isn’t about luxury service or gold-plated management, it’s actually about risk, responsibility and long-term outcomes.
The true cost of “cheap”
Managing agent fees don’t exist in isolation. They sit at the centre of a much bigger picture that includes building safety, legal compliance, financial governance and resident trust. When fees are driven too low, something else usually gives way – time, experience, oversight or capacity.
In practice, this can look like:
- Overloaded managers with too many buildings
- Reactive rather than planned maintenance
- Delays in compliance work because it’s not urgent “yet”
- Limited scrutiny of contractors and consultants
- Poor communication when issues escalate
None of these show up neatly on a fee comparison spreadsheet, but they surface later as complaints, disputes, tribunal cases or emergency costs.
The compliance landscape has changed
The Building Safety Act, enhanced fire safety duties and increasing scrutiny of service charges have fundamentally changed what managing agents are responsible for. Residential block management is no longer a largely administrative function. It is a regulated, risk-led role with real accountability.
Cut-price management models were built for a different era – one where the consequences of getting it wrong were often slow to appear and easier to deflect. That is no longer the case. Today, directors, freeholders and managing agents all sit closer to the sharp edge of responsibility.
A lower fee does not reduce that exposure. In many cases, it increases it.
Common misconceptions
There’s a misconception that paying more for management means paying for fancy portals, slick branding or layers of unnecessary reporting. In reality, the value lies elsewhere.
Good managing agents invest in:
- Experienced, properly supported staff
- Ongoing training and sector knowledge
- Systems that prioritise compliance and financial control
- Time – to think, plan, inspect and challenge
This isn’t about extravagance. It’s about having the capacity to do the job properly, consistently and calmly, even when nothing has gone wrong.
The risk often sits with directors
One of the uncomfortable truths in leasehold management is that when things unravel, it’s often the directors who feel the pressure most acutely. They are the ones answering questions from residents, responding to solicitors’ letters or trying to untangle historic issues that were quietly left unresolved.
Choosing a managing agent purely on price can unintentionally shift risk onto the very people trying to do the right thing. A more robust management approach may cost more upfront, but it often reduces exposure, stress and unplanned expenditure over time.
A longer-term view
At JMJ Asset Management, we believe residential blocks should be managed with the same long-term thinking applied to any other valuable asset. That means looking beyond the headline fee and asking more meaningful questions:
- Does this agent have the time and expertise to manage our building properly?
- Are risks being actively identified and managed, or simply reacted to?
- Will this approach still work as regulations continue to evolve?
The safest option is rarely the cheapest, but it is often the one that brings clarity, stability and confidence.
In a sector under growing scrutiny, good management is no longer about doing the minimum. It’s about protecting buildings, finances and people in a way that stands up to challenge, today and in the years ahead.
