Qualifying Long term Agreements (QLTA) – the dangers!
Are you aware that once a QLTA is in place, this removes residents rights to get quotes for works needed in the future and ALL of the jobs go to the contractor signed up to the QLTA during the contracted period?
NHG add a management fee on top of the quote, the higher the quote from the QLTA contractor, the more NHG make on their management fee. NHG currently charge 15% management fee on top of costs.
There is no incentive for the QLTA contractor to keep costs down once the QLTA contract has been signed off.
There are no benefits whatsoever to residents of having a QLTA in place.
In one case cyclical maintenance costs increased by 800% after the QLTA was put in place.
The below information on QLTA is taken from https://www.servicechargedisputeguide.info/qualifying-long-term-agreements/
Some arguments against using long term agreements:
- The prices in the contract may start out good, but end up either being very expensive or too cheap for the contractor to continue with the contract. Whilst prices are set competitively at the outset of the contract, the contract will normally state a formula for how prices will go up during the term of the contract. A normal provision is to say that prices will increase by inflation. The problem with this, and other any other formula, is that in practice prices (particularly for building work) go down as well as up. They don’t always move in line with inflation or other measures and this inevitably means either the landlord ends up paying too much or the service provider ends up getting paid too little.
- There is a higher risk of service interruption. Landlords become reliant on a single provider in long term agreements, and may find it more difficult to replace a service provider who fails than a Landlord which has not developed this kind of reliance on a single provider
- It can be more difficult to enforce standards of service. A Landlord may simply have to ‘put up’ with poor standards because of the difficulties, and costs, involved in terminating a long term agreement.
- No matter how extensive the contract, it may not specify a fixed amount for a particular service or type of work. Where no price has been agreed in advance, there is a danger that the contract allows service providers to charge very high uncompetitive costs which a landlord may, in practice, be unable to challenge.
What can you do?
If you receive a S20 letter from NHG notifying you of the intention of entering into a QLTA, it is important to ensure you get a majority of residents to send in their observations (objections) within the statutory timeframe of 30 days.
And please send us copies of any observations/objections you send in to NHG.