Management agreement woes

Time is running out for voluntary agents working with registered social landlords in the management of supported housing schemes to sign the new management agreements that have resulted from the introduction of Supporting People.

I am worried that this shortage of time is not allowing agents to contest some very unfair terms being proposed by RSLs and which could threaten the financial viability of many small agents.

Apart from the fact that most RSLs are offering their agents a much smaller share of the core rent in the coming year than in the current year, some of the terms could cause serious cashflow problems immediately and revenue problems in the future.

Many RSLs are requiring their agents to pay them the net core rents before they have been received and before the RSLs would have received the rents if the schemes had been directly managed.

Despite this, one large London RSL is asking its agents to pay interest at 10% if they are late in paying over net rents.

RSLs never paid interest when they were late in paying over their agent’s share of social housing management grant – and now they are moving the goalposts.

The most inequitable clause in many of the new agreements relates to VAT.

Although the services provided are presently considered to be exempt from VAT, RSLs are preparing the ground to ensure that their agents, rather than themselves, will suffer any loss of income if the services become VAT-able, as I believe they will, in the future.

RSLs are doing this by stating that management fees are inclusive of VAT when clearly they are not. If agents accept this clause, a fee of £20 would become £17 on registration for VAT and the 15% loss of income would fall on the agent.

Very few agents would be able to bear this.