How ethical is your business?

Michael Lee believes it’s time property managers started taking professional ethics seriously. It could pay dividends.

Behaving ethically is central to the concept of being professional and promotes consumer confidence. As property managers we are responsible for substantial amounts of client money, we appoint contractors and place contracts for services and - in many instances -insurance. By ensuring we do so in an ethical way not only builds confidence in our services among our customers but also promotes the property manager as a trusted professional.

If you ask a residential managing agent why they chose property management as a career, the usual response is that they “fell into it”. As a consequence, ethics has not always been ingrained as part of their training. In contrast, those property managers who chose to qualify via membership of the Royal Institution of Chartered Surveyors (RICS) have workplace integrity drilled into them from the commencement of their training, with professional ethics listed as one of the core competences.

In order to gain an RICs qualification, the organisation has five standards that their members must be able to demonstrate. These are:

  • to act with integrity;
  • to always provide a high standard of service;
  • to act in a way that promotes trust in the profession;
  • to treat others with respect; and
  • to take responsibility ie be responsible for all of your actions

The RICS publishes guides for all five standards on the regulation section of their public website at www.rics.org.

Due to the relatively low management fee levels historically associated with property management, businesses in our industry sector have tended to generate additional income streams such as contractor services and related hidden business interests. These arrangements are frequently regarded as being unethical and continue to be a source of distrust between managing agents and leaseholders, mainly due to the hidden nature of such activities. The drive to be transparent - therefore promoting trust - will allow clients and consumers rightly to question such income streams and help drive those practices perceived to be unethical out of the industry.

To raise standards in the profession The Association of Residential Managing Agents (ARMA) has introduced accreditation of their members alongside an independent Regulator, known as ARMA-Q. Once they have achieved accreditation, members must abide by a Consumer Charter and a set of practice standards. The Consumer Charter includes a requirement to be honest, fair, open and transparent and to avoid conflicts of interest, which is also at the core of the standards.

The increase in self-regulated property management via ARMA-Q sets out to improve client confidence by making all transactions as transparent as possible. Property managers are tasked with ensuring that leaseholders are updated regularly and kept informed of exactly how their money is being spent and what they are getting in return. However, despite the plus-points of ARMA’s drive for higher quality services, self-regulation still leaves a large portion of the market unprotected from poor service delivery where non-ARMA/RICS managers are appointed. Only compulsory regulation can ensure industry-wide compliance.         

Outside of property management, the issue of ethics has gone global. The International Ethics Standards Coalition (IESC) was established in 2014 to create a global alliance of real estate and related professional organisations. These organisations have their own standards based on common principles such as integrity, transparency and trustworthiness. However, to reassert the role of ethics in real estate to meet the needs of today’s global market the IESC are preparing an over-arching code of conduct to provide assurance, consistency and confidence to all users of professional services. The coalition currently has 53 international members which includes the RICS, ARMA and IRPM  - all of which are involved in developing a single code.

To improve standards, ethics should become a key element in training. The qualification of staff should be encouraged and companies should become ARMA Accredited and promote their company’s ethical policy. The result will be an increase in consumer confidence, which ultimately leads to business success.  

More information about ARMA-Q accreditation is available on the ARMA website at www.arma.org.uk.

[footnote] Michael Lee BSc(Hons) MRICS MARLA is Managing Director of HML Shaw Ltd

Tel: 020 8948 3211

e: Michael.Lee@hmlshaw.com