Factors and in-house trades firms

If your factor uses an in-house trades firm, you may wonder how the factor ensures value for money.

There are of course benefits in using an in-house firm. It avoids the need for every job to be tendered for (and the best builders won’t always want to tender to be undercut by someone offering a cheaper but lower standard specification). With an in-house team, the factor can also control quality and performance directly. On the down side though, the in-house firm used by social landlords may prove more expensive in some situations as they will often use a "Schedule of Rates" contract which provides a standard price for each job covering a range of situations which might not apply in your building.

There is some fairly general guidance from the Code of Conduct for Factors:

  • 6.3 On request, you must be able to show how and why you appointed contractors, including cases where you decided not to carry out a competitive tendering exercise or use in-house staff.
  • 6.6 If applicable, documentation relating to any tendering process (excluding any commercially sensitive information) should be available for inspection by homeowners on request, free of charge. If paper or electronic copies are requested, you may make a reasonable charge for providing these, subject to notifying the homeowner of this charge in advance.
  • 6.7 You must disclose to homeowners, in writing, any commission, fee or other payment or benefit that you receive from a contractor appointed by you.

The Scottish Housing Regulator, which governs social landlords, also has a para, even less specific, in their Review of Factoring Services Nov 2017 which says housing association factors should:

  • demonstrate that owners are receiving a value for money service
  • provide good quality information to owners
  • give detailed information on charges.

But what if your factor has just negotiated a contract rather than tendered?

A recent case about this was heard by the First Tier Tribunal (see our article on Resolving Problems with your Factor to see where the FTT fits in).  In this case, the Tribunal said that “It was all the more relevant to ensure there was transparency where no competitive tendering had taken place and there was a relationship between the respondent and the contractor. Homeowners were entitled to ascertain the reason for the appointment.”

And is there anything flat owners can do?

Don’t assume that your Factor won’t take up complaints about poor workmanship in an in-house firm.  Always report problems. If your concerns are more general, ask your Factor how they achieve value for money, and how they handle complaints. Ultimately, if you are unhappy, you and your co-owners can look to changing your factor.