A new compliance division has been set up by the property management department at Knight Frank to focus on ‘optimising the control of formal, legal and financial processes undertaken by property managers on behalf of property owners’. You are also adding to your services a compliance audit devised for investors interested in property acquisition and tenants who would like to verify the terms of their contracts during the lease negotiations. What inspired you to introduce the new service?
Monika Dębska-Pastakia, chairman of the board and partner at Knight Frank: We were inspired by the dynamic market changes currently influencing property management services. On the one hand, tenants and property owners have growing requirements, while on the other we have changing legislation locally as well as internationally with new regulations resulting from EU directives. We also have to embrace the specialist knowledge relating to buildings’ “green certificates”. In essence, there are more formal and legal aspects, notwithstanding operational management, that need to be closely monitored and implemented. Hence the new set-up of two organisational units in our property management department: operational property management and property management compliance.
What added value will the newly created compliance department provide for property owners?
Magdalena Oksańska, head of compliance at Knight Frank: First of all, they can rest assured that compliance professionals are keeping open a watchful eye, so that all formal and legal property-related requirements and procedures are followed. Also, measurable time and procedural savings will be made for the client. This applies especially to international investors who are not yet here on the ground, newcomers to the Polish market and passive investors.
How does this work in practice? You offer your existing clients an additional compliance service? Would this involve additional costs?
Monika Dębska-Pastakia: All our existing clients have been automatically covered by the services of the compliance department. Our initial discussions with some of our clients confirmed our belief that it was the right decision to make. Our clients can rest assured that our compliance services are complimentary and fully included as a property management package deal.
You also provide compliance audits of the property management process to clients outside your portfolio who are interested in property acquisitions in Poland. You are risking a lot as pioneers…
Monika Dębska-Pastakia: Until now, compliance services have generally been offered to banks and insurance companies. We are the first to introduce such services to the real estate market in Poland. Compliance-related services are well-known on Western European property markets and we believe they will become popular on the Polish market.
What exactly do you offer to external clients?
Magdalena Oksańska: We offer potential property investors a full review of the property management provision as part of the due diligence performed. We also assist tenants in verifying their lease agreements in the context of their internal requirements and procedures, in particular when related to operating costs and reconciliations. Many tenants have global corporate lease standards and only an experienced property manager will be able to check if they are in line with the standards offered by the property owners. Another domain where we can advise is the interpretation of property management-related regulations. The recent VAT interpretations made by tax authorities have encouraged more investors to opt for share deals as opposed to direct property transactions. When acquiring a company, the investor takes over its liabilities and the associated risks. In order to mitigate any unforeseen consequences of the share transaction, as an experienced consultancy we perform a review of the company history related to the property management process to point out potential risks for the property owner.
Does the property management team have any concerns regarding additional, external control?
Aneta Rogowicz-Gała, head of property management at Knight Frank: On the contrary. We are pleased to gain additional support from a specialised compliance department. This is extremely important nowadays, when the role and scope of the tasks a property manager has to perform have changed significantly in recent years. It has to be said they far exceed pure building administration. A property manager has to wear the hat of a lawyer, psychologist and marketing expert at the same time. Property marketing should be the focal point of any property manager who wants to keep the property in a ready-to-sell condition and maintain its value. In simple terms: in practice the line between a property manager and an asset manager is becoming more and more blurred. It is good to be on the safe side in this ever-expanding range of services. This is the added value of our compliance services.
