Do managing agents make money from contracts & suppliers?

8till8

Registered User
Messages
407
So managing agents are employed by OMC's and are paid a fee for this but do they also make money from contracts e.g. repair works, redecorating etc

I've heard of this happening and was told it was 'common practice' but don't have any first hand knowledge of it, the example given to me was a painting contractor who adds 5% to the quote and this goes to the managing agent for giving him the work

Has anyone else come across this? Is it legal?
 
Depends on the 'common' practice I guess. A management agent often employs a few trademen who can move at short notice.. They will pay the trademen for their work and probably bill the OMC for fixing the problem. The OMC are free to find people to fix it themselves without using the agent. If you employ a middle man to do the admin work for you then they will need to get paid.
 
If the contract with the agent covers that they will organise the tradesmen for ant work, then they should definitely not be padding the bill.
 
I use an agent for my BTL property. The agent sources tradesmen when needed and one general handyman seems to have the same invoicing address as the agent does. I don't know how close the arrangement is. I presume the handyman has to be free to take other work to justify his self-employed status for Revenue.

Not clear how formalised the arrangement is between agent and handyman is and I don't ask. The price and service are fine. In any case an agent is useful because tradesmen like repeat business and an agent can provide that the way a small-time landlord can't.
 
I am an voluntary director of an OMC. Our managing agent charges a % of the contract if we re-tender a contractor. It doesn't happen often but at least it's more transparent than the back handers that were common in the industry before.
 
So managing agents are employed by OMC's and are paid a fee for this but do they also make money from contracts e.g. repair works, redecorating etc

I've heard of this happening and was told it was 'common practice' but don't have any first hand knowledge of it, the example given to me was a painting contractor who adds 5% to the quote and this goes to the managing agent for giving him the work

Has anyone else come across this? Is it legal?
In the construction industry it is standard practice that the main contractor gets 5% of the subcontractors gross price. This is additional to the main contractors own charges. This is in every construction contract in the country and widely understood.

The main contractor has responsibilities to go with this payment, he must provide the subcontractor with various facilities, from site access to site toilets.

It is understandable that a managing agent would seek to have a similar arrangement with plumbers etc. I do not know how common it is in that situation.

The question I would ask is what costs the managing agent is covering out of this 5%, or are they being passed on to the OMC.

Any Quantity Surveyor would be able to tell you easily exactly what costs are covered by this 5% in a standard construction contract.
 
That all sounds legit.

My own experience in the dim and distant past was of a managing agent appointed by a developer who retained control of a development, had an economic interest in the agency, and contracts being awarded to connected companies at inflated values.

It’s not paranoia if they’re really out to get you!
 
My own experience in the dim and distant past was of a managing agent appointed by a developer who retained control of a development, had an economic interest in the agency, and contracts being awarded to connected companies at inflated values.
I had the exact same experience. It has put me off properties that have a management company for life! The developer in my case also owned a landscaping company, resulting in the people cutting the lawn always getting paid before the insurance, ESB and waste collection!
 
Back
Top