Owning a leasehold property can be great in terms of investment, yet it can quickly become a nightmare when it comes to dealing with fellow leaseholders if the block of flats is self-managed (i.e., without a managing agent).
Due to busy lifestyles or lack of understanding, many things will likely be missed. Changing communal light bulbs, meter readings and general maintenance is one thing, but when it comes to legal requirements, health and safety, debt collection and major works, this becomes another matter entirely. Managing a long leasehold residential property (also referred to as Block Management) is complex. It will involve collecting service charge, ground rent, dealing with complaints, organising and overseeing repairs and inspecting the communal areas on a regular basis. A management team like ours at Fraser Allen Estate Management will take away the worry and angst from all leaseholders. The most beneficial aspect being, your management agent will deal directly with leaseholders, and their tenants if required on any aspect relating to the development.
Benefits of Using an Agent vs Self-Management
Planning and collection of service charge and major works.
A professional Managing Agent will bring an organised approach to the planning and collection of service charges and reserve funds, the timetables for redecoration and repairs and inspection and supervision of works. A managing agents’ assessment of what must be done, and when, will be independent of private interests and preferences and based solely upon their duty to keep the premises in good repair.
The process of collecting funds and the responsibility for taking steps to recover unpaid charges will be removed from the individual directors/leaseholders of the Resident Management Company.
Administration A managing agent will be geared up to handle the mundane and time-consuming administration, and may handle it more efficiently through better facilities for storage and retrieval of records and documentation essential for accounting purposes.
Disputes Issues and disputes can be dealt with impartially by an arm’s length agent in order to limit the animosity and division which could arise where personal issues become the business of neighbours and colleagues. Lease and company responsibilities The agent distinguishes between the needs and duties of the company under the Companies Acts and the needs and duties of the company in its separate role as landlord under the leases and the relevant landlord and tenant legislation. Professional Indemnity Insurance Agents should hold professional indemnity cover as a further protection against negligent acts or incompetence. Using an agent passes some of the responsibility for compliance with leases, laws and codes of practice to the agent. BUT the directors of a Resident Management Company are responsible for setting policy and monitoring the work of the agent. Fewer legal problems A good managing agent is up to date with the latest laws. Therefore, if a problem arises, the agent can deal with the legal issues professionally and as quickly as the law allows.
Dangers of Self-Management
Managing your block of flats is a good idea, isn’t it? How hard can it be? Maybe not as easy as you think!
Problems with the law Managing the block can be a minefield if you’re not legally minded. The legislations, rules and regulations change, and to keep abreast of these, and do everything else, is incredibly stressful. If you come unstuck with legalities, the consequences can be very serious for you. A good managing agent will protect you and keep you fully up to date with all changes in property law.
Section 20 Consultations Sometimes, like when there’s an emergency, it isn’t practical to undertake a Section 20 consultation before carrying out major works. In these cases, you can apply for ‘dispensation’ from consultation. In the majority of cases however, you need to go through the Section 20 process before you can start incurring major works costs. Without the consultation you may find that you can recover no more than £250 per leaseholder. Without the relevant knowledge of this procedure, the legal complications can be disastrous. Ignoring the lease An essential part of self-management is reading and understanding the lease and your obligations within it. Failure to meet the requirements of the lease can lead to leaseholder disputes and dents in vital cashflow. Spending on ‘unauthorised extras’ Again, thinking about the lease, you can get into hot water if you spend the service charge monies on items not permitted in the lease. This could lead to being unable to reclaim these costs ending up with big financial and legal problems. Incorrect insurance cover Saving money on insurance may seem appealing, but self-management can lead to the appropriate level of cover not being placed. Worse still, the policy underwriter may not understand the complexities of block management. For example, will tenants be covered for alternative accommodation or just loss of rent? What happens if leaseholders rent to students or via AirBnB? A managing agent would ensure your insurance is adequately placed as well as placing Directors and Officers Insurance for relevant parties.
So, why having an agent is a good investment? As you can see from the points above, working with a Managing Agent, frees up your time so you can concentrate on the things you enjoy.
How to Choose Your Property Management Company
- Ask friends, colleagues and other sources that you trust for referrals. Then check information about that referred company.
- Research Property Managers Online. Look for companies that are members of the IRPM (Institute of Residential Property Management Ltd.)
- Read online reviews from legitimate customers across a variety of different platforms. If there are recurring themes of poor practice it is worth investigating if it’s true.
- Type of property in their portfolios – do they match yours?
- Company location – make sure they are based near the property, not miles away.
- Visit properties managed by the company. How well kept are the gardens? Visit more than once.
- Talk to some of the residents about how well the property is managed.
- Always meet in person rather than select a company online or over the phone.
