or their agent

							Local Management Agreements


It has become apparent that the Local Management Agreement (LMA) model is likely to
be a popular new option. This paper has been written in order to offer a detailed
definition of the LMA model and to promote a discussion about the circumstances
where it might be the most suitable option.

There are many local arrangements for tenant involvement. Landlords and tenants
groups are free, of course, to choose the label they think fits best. So terms like ‘estate
agreements’, ‘estate boards’, ‘local management boards’ etc. are used freely without
any common agreed definition.

The significance of the new LMA model is that it is a model whereby a landlord can
legally delegate housing management responsibility to a tenants group. As such, it is
important that there is a clear and common understanding of what is meant by an LMA.

A Definition

   1. A Local Management Agreement (LMA) provides for a community group to
      manage one or more services on behalf of a landlord or a landlord’s managing
      agent. A LMA delegates the landlord’s client side functions in respect of those
      services, together with control over the resources to procure a service of the
      community group’s choosing.

   2. It may be that an exploration of the options results in a resident or community
      group becoming the service provider contracted directly by the landlord or their
      agent, with lines of control and accountability no different from those that apply
      with any normal contract, and with no role for the benefiting community as
      client/commissioner for the service with control over the budget that procures the
      service. This is not a LMA. Rather it should be considered and identified as a
      contract with a Resident Service Organisation or Social Enterprise. This is an
      acceptable outcome of an ‘Exploring the Options’ stage 1 if residents choose this
      as the best route, but it is not a LMA if it does not devolve client side
      management responsibility.
   3. The community group which agrees a LMA should normally become an
      incorporated body if the LMA involves either significant transfer of funds, or
      transfer of responsibility for entering into contracts including staffing contracts. In
      some cases an LMA may not involve such responsibilities, or the landlord may
      hold the legal liabilities while transferring decision making powers, and only in
      these cases should the community group remain unincorporated.
   4. Where a LMA involves local authority housing, it will require s.27 consent from
      the Secretary of State. The 2005 Modular Management Agreement is currently
      the only agreement that has a general consent. The MMA can be used as the
      basis for a LMA. Other forms of agreement may be considered but will require
      specific consent.

   5. In respect of both local authority and housing association stock, a LMA may be
      agreed as an end in itself, and/or as a ‘stepping stone’ to the greater
      responsibilities accepted by a TMO with a fully fledged MMA.

   6. For local authority stock, any transfer of management responsibility to a tenant-
      controlled organisation must proceed to a Feasibility and Development stage
      once the relevant budget exceeds the EU procurement limit for housing services.
      This will require the management agreement to be with a TMO subject to a
      competency test and a ballot in accordance with the regulations and guidance.
      Even if the proposed management agreement is a LMA, the tenant group may
      opt for the F&D route if it wishes to benefit from the support offered by an
      external competency test and ballot. The funding and duration of the F&D
      programme should reflect the range of responsibilities that tenants expect to
      undertake.

   7. Housing associations are not restricted in the value of a budget they may devolve
      through a LMA, nor are they required to use any particular form of agreement.
      However such restrictions may in future be made a condition of receipt of TEP
      funding or become conditions imposed by the regulatory regime.


LMAs and ‘Small’ TMOs – a comparison

When promoting the new regime and when helping groups to explore options it might be
helpful to compare and contrast the LMA model with the voluntary route to a small TMO
with limited responsibility.



Let us assume tenants in a block of 150 flats are interested in managing their caretaking
and cleaning services and that the contract value would allow the LMA approach. They
might want to consider either an LMA or a TMO. The new regime opens up the
possibility of ‘fast track’ TMO developments using the voluntary route and with a
relatively short training programme and relatively small grant, reflecting the limit of
proposed responsibility. How do the two options differ and what are the key advantages
of each?



                            Local Management              ‘Fast Track’ TMO –
                            Agreement                     Voluntary Route

Incorporation               The group may choose not The group will be required
                            to incorporate but this will to incorporate
                            risk personal liability
                            unless landlord can act as
                            trustee and carry liability.

TEP Grant                   Grant available at            Grant available at
                            exploring the options         exploring the options
                            stage.                        stage and feasibility /
                                                          development stage.

Management Agreement        LMA based on                  Must use MMA which has
                            Westminster model would       general approval from Sec
                            require one off Sec of        of State.
                            State approval. Could use
                            MMA(?).

Competence                  Would be for landlord to      Competence must be
                            be satisfied that the group   confirmed by external
                            are competent before          assessor against
                            entering into LMA             published standards.

Test of Opinion             Consultation need not         Ballot must be conducted
                            include a ballot. Landlord    in accordance with RTM
                            will determine                regulations
                            requirements.

Time scales                 After the exploring the       After the exploring the
                            options stage is complete     options stage is complete
                            the timetable will be         the timetable will be
                            determined by the training    determined by the RTM
                            and development               regs, the training and
                            programme and                 development programme
                            implementation work           and implementation phase
                            following a test of opinion
                               and any need to get Sec        following a ballot.
                               of State Approval to
                               agreement.

Apparent advantages            Less formal process,           Grant funded training
                               potentially quicker,           programme, clearer
                               competence issues less         framework of liability and
                               complex. Tenants may           accountability, greater
                               feel more closely              emphasis on competence.
                               supported by landlord.         Standard approved
                               Could be a ‘stepping           agreement. Subsequent
                               stone’ to TMO                  addition of responsibilities
                               development.                   possible.

Apparent disadvantages         Not incorporating creates      Regulated process and
                               personal risks for             external assessment may
                               committee members, LMA         extend timescales and
                               approval may cause             increase formality.
                               delays.



It is clear that it would be too simplistic to present the options to tenants in a way that
suggests:

Limited responsibility = quick and easy LMA route

Greater responsibility = longer and more challenging TMO route

The issues are more complex than that and will need more explanation in promotional
material and more exploration in options studies.


       Paul Lusk (ATIC) & Trevor Bell (NFTMO) November 2008