Are you just engaging the services of a managing agent?

I had to buy a new TV last weekend, so off I went to one of the leading electrical wholesalers after deciding on the internet which one I wanted. I arrived, went straight over to a salesperson and told him I would like one of those please.

 

Went to the check out, waited for him to get back from the warehouse then just wanted to pay for and get it back home and set it all up. Not too much to ask is it? Instead I was being asked whether I wanted the latest new HDMI socket or their piece of mind insurance policy.

 

OK I guess they have to ask but between entering my address details for TV licensing purposes and handing over my debit card the salesperson asked a further two more times to the point where I nearly said stuff the TV and walked out.

 

I guess they are only following orders and trying to increase the company's income but it did make me wonder if this is one of the reasons many shops are closing down and people prefer to order online?

 

It also got me thinking about the business of managing agents and how for some residents engaging the services of a managing agent could also lead to other associated companies coming on board at least with the electrical wholesaler the salesperson did give you the option but for leaseholders before they know they are being insured by the managing agent's broker and having the cleaning and gardening done by an associated contractor.

 

It might not even end there all the services provided to their development or resident company could be being carried out by contractors or organisations who through some means pay the managing agent and make no mistake it is you who will end up paying for it with increased costs.

 

Managing agents are getting more and more crafty in finding ways of earning extra revenue and not declaring it to residents and even seem to stick to industry regulations.

 

I heard only the other week of one managing agent who are making a charge to contractors and service providers for appearing on their website but what they were in fact doing was charging a fixed fee for allowing a contractor to work on a site they manage, the more sites they worked on the higher the fee but it looks to get over the anti-bribery laws  they make a charge for them to have their logo on their website on the contractor section.

 

Feel rather guilty now for giving that poor salesperson such a hard time.

Insurance Excess - who pays it?

This has been the subject of debate for many years, who should be responsible for paying the excess when making a claim against a block insurance policy?

With many of today’s managing agents having been challenged about insurance commissions received now opting out of dealing with insurance claims altogether this is a question that seems to get raised more and more.

If an insured damage is suffered to the communal parts of the development the answer is simple the management company will pay it.

What happens though if your property suffers water damage from the flat above?

The terms of the policy will no doubt read along the lines of the policy holder or claimant will be responsible for the excess which will automatically be deducted by the insurer upon settlement of the claim.

As most block policies are in the name of the management company then that would make them the policy holder and therefore they will be responsible for the excess?

In most cases the claim form will be completed by the managing agent on behalf of the management company they represent, so again in this instance the claimant and the policy holder are the management company and therefore responsible for the excess.

 

If your managing agent no longer deals with claim handling then it is up to the owner of the property that has suffered water damage to make the claim and then they will be responsible for the excess and recovering those costs from the flat above.

Depending of course on the cause of the water damage from the flat above is it fair for them to have to pay the excess?

If they were negligent or refused to deal with an escape of water despite being advised then yes by rights they should pay the excess however what if the residents of the flat that suffered the water damage went away for a few days and the water leak went un-noticed should the flat above then be responsible?

Another way at looking at it is if both flats had separate insurance then the insurance company dealing with the water damage claim would look for reimbursement of all costs including the excess from the insurer of the flat that was the source of the water leak.

With a block policy all properties are insured as a whole and by one insurance company therefore the insurance company would look to reimburse costs from themselves with the exception of the excess which would be payable by the policy holder.

Therefore and what we advise our clients is unless the cause of the water damage is due to a person’s negligence the excess is paid by the management company through the service charge funds. Needless to say the final decision rests with the client!

It is therefore equally important when arranging block insurance cover to ensure you do not sacrifice a lower premium in favour of too high an excess charge as you can never guarantee the amount of claims that will be made and that could lead to a serious budget deficit.

Dispatches- property nightmare

If you missed last night's dispatches you can catch it again here:

http://www.channel4.com/programmes/dispatches/4od/player/3399948

Other media soon jumps on the leasehold bandwagon:

http://www.guardian.co.uk/money/2012/aug/20/leasehold-property-laws-sweeping-reform-thinktank

So is Grant Schapps MP the housing minister wrong not to immediately look at regulating the industry and who to regulate - Freeholders, managing agents or the directors of resident management companies?

I can see why the current and previous Governments have left it alone just too many scenarios to have to deal with!

How to choose a managing agent.

20 years ago you would be forgiven for not knowing what a managing agent did or what the term block management even meant. Back then there were just a few managing agents, developers weren’t building as many leasehold properties as they are in most towns and cities today. Therefore the number of managing agents has also increased, some solely deal with block management others will also incorporate property lettings and sales into their business.

Although the industry is unregulated managing agents still have to abide with relevant laws and regulations and the good ones will be registered with the ombudsman service and probably will be members of an industry trade body ARMA, ARHM, LKP etc.

So how do you know go about either finding a new managing agent or ensuring that you are receiving not just value for money but also getting the service you and your building deserve?

Below are some points that residents should ask of any prospective or their current managing agent, our answers are found below the question in italics:

Experience: 

·         Are they registered with the ombudsman service?

Block Managers are registered with the Ombudsman Service

·         Are they registered with the ICO

As we handle resident information we are registered with the ICO

·         Are they a member of an industry trade body?

We are an accredited agent of the LKP who have their own internal complaints procedure

·         How many years’ experience in the industry do they have?

We have worked in the block management industry for 20 years

 

·         Are they managing any other developments like yours?

We currently are managing a variety of developments ranging from mixed tenure developments to purpose built apartment blocks.

·         Have they been brought before the LVT?

We have never been brought before the LVT and ensure that a thorough explanation is given to residents on any service charge cost.

Managing Agents costs:

·         Do they charge a percentage or per unit fee?

Our fee is based on what is more beneficial to the development and will either be based on a percentage of the total service charge demanded or a per property per year cost.

·         If a per unit fee, how much per unit per year?

Fees are based purely on the size of the development and range form £100-£140 per leasehold property.

 

·         Apart from the management fee will they make any other additional charges for managing your development?

The only time any additional charge will be made will be for extra postage monthly newsletter etc. or if residents decide on a one off project outside of the normal service charge budget where a one off payment will be made.

Hidden costs:

 

·         Do they earn commission for arranging buildings insurance?

NO – this can only increase resident’s service charge costs

 

·         Do they charge contractors any form of fee for awarding them work?

NO – this can only increase resident’s service charge costs

 

·         Do they have any association with contractors or an insurance provider?

NO – this can only increase resident’s service charge costs

 

·         Do they use client accounts?

No all managed development have their own designated bank accounts and also currently enjoy 2 years free banking.

·         Do they earn a fee from any energy supplier?

NO – this can only increase resident’s service charge costs

Terms and Conditions/Regulations:

·         How long is the notice period should you wish to terminate their services?

Our management agreement stipulates that we are employed on a month to month basis

 

·         Will they charge either a takeover or handover fee?

We do not charge wither a takeover or handover fee

 

·         Do they abide by the RICS service charge code?

We abide strictly with the RICS service charge code as well as all other known industry regulations

 

·         What measures do they have in place for Health & Safety?

All management of Health & Safety is included within our management fee, we are both competent and NEBOSH qualified to manage this on the resident’s behalf.

Too much like hard work to change managing agents

The thought about having to go through the process of replacing your current managing agent can be daunting at the best of times and it is often the case residents will stick to the the devil they know even if it means they are forever checking up on them.

Any relationship personal or business has to have an element of trust and when that is gone can any relationship continue and flourish?

In most cases 3 months notice has to be given to terminate a managing agents service, during this time it is safe to say that the agent will do the bare minimum when it comes to looking after your development and the new managing agents will no doubt have to pick up the pieces which is why some agents charge a takeover fee, add this together with any handover fee your old agent will charge and you can be looking at the best part of nearly £1000 form your service charge fund to change from one to another.

Not much can be done when it comes to your old agent charging a handover fee unless of course it was not formally agreed in their management agreement but we can assist any development when it comes to appointing us as your new managing agent by not charging a takeover fee no matter how far into your financial year you are.

We will even assist you during the 3 month termination period to the extent that we will manage your development free of charge during that period as it would assist us both in a smooth handover and also give us the opportunity to really get to know your development.

Having no association or preferred contractor scheme we will happily work with your current contractors if you so wish and even obtain competitive building insurance quotes should your renewal fall within that termination period. 

So if you feel that you are not receiving the service you and your building deserve call us today!

From the frying pan into the fire!

I have previously mentioned managing agents who get appointed by a developer on a previous post but it still amazes me why developers do not wise up to such agents and their ‘fill their boots’ business mentality.

I was recently contacted by a resident of a new build local, mixed tenure development who kindly sent me a copy of their current budget not surprisingly most of the regular maintenance was being carried out by associated contractors, the insurance premium was exaggerated and for the last two years they had in the budget costs for a playground that hadn’t even been built!

Just when you think you’ve seen it all I stumbled on a new tactic to confuse the residents even further there was a separate budget item for VAT, instead of VAT being added against each cost it was all grouped together. Where VAT is charged by a contractor our budgeted costs will include the VAT that way it is simple to see that for instance gardening costs so much and the cost includes VAT if of course the current gardening contractor is VAT registered.

Anyway I reviewed the budget and advised the resident of immediate cost savings without even reviewing the costs of gardeners, cleaners etc. and instantly could reduce their annual service charge by over £18,000.

It would have been all too easy to shave a few thousand pounds off of other costs but that is not our policy and I always advise that three alternative quotes should be obtained depending on the specifications. I know other agents will contact a preferred or associated contractor for a comparative cost but that does not ensure residents will truly receive value for money only that agent will benefit from another development to manage and one of their preferred contractors with more regular work.

So to any resident looking to find another managing agent be careful you are not jumping from the frying pan into the fire always and make sure you get comparative quotes from other managing agents and find out about the services they offer and of course how transparent they really are.

Developers please also take note it may seem easier to use the services of a national agent but what is that doing for your after sales reputation?

Guest contributer article

I was recently very proud to be asked to be a guest contributer for the independant website Leasehold Life (www.leaseholdlife.info)

They wanted to know why I chose to be come an accredited managing agent of the Leashold Knowledge Partnership?

My reply and article read:

There is a lot of confusion in the leasehold sector and I can honestly see why it remains unregulated. A managing agent can be employed by a freeholder, developer or by the residents and both guidelines and current regulations try to cover all three scenarios.

The previous company I was with were members of ARMA but basically chose which guidelines to follow and when it came to guidelines with regards to being transparent they chose to ignore them. They did not declare any commissions received and collected service charges monies in one large client account. Needless to say they are by no means alone and there are plenty of ARMA members who do the same and have been repeatedly brought before the LVT. As in any civilised society if you break the rules you should pay the consequences but none of these companies received any disciplinary action from ARMA, which begs the question what do they stand for?

I stumbled across the Leasehold Knowledge Partnership through the CarlEX website and what I read about them made sense. They appear not just to be an ARMA alternative but an actual force to be reckoned with when it came to protecting leaseholders. This was exactly what I wanted. My customers would know that being an accredited member meant that they had more than just my word that my business would at all times be honest and transparent because if I weren’t then here was an organisation that would actually do something about it!

I therefore made contact with Melissa Briggs, one of the founders, and it was quite clear from talking to her that the Leasehold Knowledge Partnership’s intentions were more than just words. Alongside other board members they are certainly on a mission to not just purge the industry of unscrupulous landlords and managing agents but to genuinely offer some meaningful protection to leaseholders. I therefore decided to apply for and received accreditation status in January 2012. It will not take much effort on my part to abide by their rules and regulations as we already share the same principles and I had already adopted a policy of transparency.

Hopefully the Leasehold Knowledge Partnership will continue to grow with more and more managing agents and developers signing up and I offer Melissa and the rest of the board my full support and wish them the greatest of success.

Profit or reputation first?

We’ll here is a right conundrum and it sheds a completely new angle on the role of managing agent and resident companies.

To make things as clear as possible to the less informed a resident company or RMC is set up to look after the shared areas of a development, this is done by the collection of service charges as set out in the lease. It is usual practice that the RMC will employ the services of a managing agent to both collect service charges and ensure that the RMC is run in accordance with all rules, regulations and by the terms of any lease.

So what would happen if the directors of the RMC were to instruct the managing agent to not only collect service charges contrary to the lease but also to apportion charges incorrectly?

You could argue that the overall responsibility lies with the directors of the RMC and that as long as those instructions are recorded in writing along with the managing agent’s argument the managing agent may cover themselves. The question is would the courts or LVT if ever service charges were challenged and whose feet would they lay the blame at the volunteer resident directors or the professional, employed managing agent?

You may think that this is just a hypothetical scenario unfortunately this type of situation is faced by managing agents on a regular basis and one that I had to face recently.

The conundrum being do you put profit before professionalism and reputation?

I am sure there are no doubt managing agents who would have taken the business I however took the decision not to on the grounds that it may have benefitted my company in the short term but long term it could have tarnished my business reputation and would go against my otherwise professional and transparent business approach.

I think I made the right decision, do you?

Contractor Selection.

Finding a reliable contractor can be hit and miss at the best of times, when you are however responsible to others the task can be even more difficult and other factors need to be taken into consideration. It is not enough to get work done at a cheap price you need to ensure not just a good level of workmanship is achieved but that all relevent health and safety regulations have been taken into account.

YES - the common areas both internal and external of a residential development are classed as work places.

You will often find contractors boasting of relevant health and safety qualifications and membership of various trade organisations all of which come at a cost. So not surprisingly their hourly rates are much higher than you'd expect to pay than if you were having work done in your actual home.

On TV of late have been various internet based recommendation sites to find a tradesperson, I am not so sure if that is such a good idea and I already will feel sorry for the poor tradesperson who upsets a customer for any minor reason as they will no doubt have their name and reputation questioned by any potential new customers.

Like so many industries the bigger the company the higher the costs this has always amazed me as you'd of thought the more work a company has the cheaper they can do the work for. In other industries when you buy bulk you'd expect some sort of discount, perhaps in the block management industry someone else apart from the residents are getting the discount?

Anyone following me on twitter may have seen various tweets regarding contractors of late, at a recent visit to a potential new site in Colchester I couldn't help but notice an electrician from Basildon changing a communal light fitting. I of course assume that they charge for travelling time, on that note is there any other profession who gets paid to travel to work?

There are of course exceptions to every rule for a large project like say external decoration you may find a more competitive quote by looking further afield where the cost of living is much lower. Then I suppose you will get the arguments about keeping things local and supporting the local community and traders.

Bring back the days of Fred,the jack of all trades who lives down the road and only charges enough for a few beers!

Managing Agents appointed by developers !

As previously advised the ideas behind these blogs often come from conversations and other information received from residents. 

Now here is a shocking example of how managing agents who are appointed by the developer seriously overcharge residents. 

I won’t mention the name of the existing agent or the development but needless to say I am in the process of helping them take control of their Management Company and remove the current agent.

A bit of background on the development this limited Management Company was set up to deal with the garden areas, there are neighbouring development each with their own limited Management Companies who are also members and contribute to this fund, a total of 161 residents.

This year’s estimated costs are:

 

You will see instantly the current agent is charging over £8700 in management fees, £1260 to be members of the board and £754 to act as Company Secretary a total of £10714 earned just from this development alone. Don’t forget they are also earning similar fess for managing the neighbouring developments that belong to this Management Company.

As you can see simply by having a fair, published pricing structure and including items within our management remit that other agents don’t we can reduce the total service charge budget by over £9000 and that’s without reviewing the other expenses.

A word of warning if you are living in a similiar development before you let any other managing agent review your budget make sure you are aware of their fee structure. It would have been all to easy for me just to have reduced the current fees by a few thousand pounds but then the residents would still be paying more than they should have done.

We were also provided with details of one of the actual Management Companies that also pay into this fund and unsurprisingly we were able to reduce their total service charge budget by over £10,500 a year without further reviews of costs.

You may think that something’s amiss and perhaps our fees are too low, as we always say they are not it’s just that for too long now residents have had to put up with paying unjustifiable fees in return for a less comprehensive and transparent service!

If you would like a comparative quote for your development call me today on:

 (01206) 561674

Is you managing agent taking more than their fee for managing your development?

Well the hot topic of late on the internet and in the press is in regards to the business practices of managing agents, or should I say the unscrupulous ones out there. Any reputable managing agent will declare all fees and earnings that are made from the management of your building the RICS Service Charge Code and ARMA guidelines goes so far to say this SHOULD be declared. Alas this is not always followed.

However with the new Bribery Act and other regulations this would mean any additional income should be declared and therefore for by not doing so is against the law!

I have therefore put together a Top Five of ways that SOME managing agents may earn additional income from the management of your development:

1.     Commission from placing your block insurance with a certain broker.

The amount of commission earned can be staggering and managing agents will often use the excuse that the commission goes towards the cost of administering insurance claims.

 

2.     Using associated companies.

This could be a contractor, service provider or even insurance broker. You will often find the same directors on the board of each of these companies, they go so far as declaring their interests with Companies House shame they don’t to leaseholders!

 

3.       Preferred contractor schemes.

Often managing agents will advise they work with a collection of contractors that they know are both qualified and competent to carry out any work. What they do not tell you is it is often the case that these contractors pay a fee to the managing agent for any work awarded. This fee they will of course get recouped from invoicing your development for any works carried out.

4.       Client accounts.

Service charge monies may be paid into one large client account. If a managing agent is managing a large number of developments that can mean a substantial amount of money is paid into this account every month. Now if service charges are collected on the 1^st of the month and not transferred to the designated development account until the last day of the month, there will be interest earned between those dates. So who is keeping the interest?

5.       Accountancy charges.

At first glance you may feel the fee paid to the accountant is rather on the high side but then again you may excuse it as you do live on a big development. It may be the case however that your managing agent is making an additional charge to collate all the end of year paper work to pass on to the accountant and therefore it is not the accountant charging such a large fee after all!

 

You may believe that the above practices would only relate to developments where the freeholder appoints the managing agent; this unfortunately is not always the case it even happens where the leaseholders themselves employ the managing agents.

If you are not sure whether your current agent is making any additional fees as detailed above then check your management agreement, failing that please feel free to copy any of the above and write to them. By law they have a duty to disclose such information and if they have failed to do this your development would be entitled to a full refund of any additional fees they earned whilst managing your development.

Then I would suggest you look for a new managing agent, one that is truly 100% transparent in not just their business practices but also when it comes to managing developments. Needless to say I know of at least one !

Section 20 confusion?

I briefly in a previous post mentioned the confusion in the industry with regards to various regulations that apply to managing agents and the management companies they work for.

One of the most, in my opinion confusing ones would have to be Section 20 consultation which was brought about by the Landlord and Tenant Act 1985. To ensure residents receive value for money and have an input, landlords must follow a set procedure when any major works are required that cost more than £250 per leaseholder.

You can download ARMA’s guideline on Section 20 – HERE

The Section 20 procedure can take over 3 months and consists of:

Stage 1:

Advise residents/leaseholder what work is required and invite them to suggest contractors, a period of 30 days must be given for them to do this.

At this point you usually find every resident knows of a relative, friend or odd job man who would like to be considered.

Stage 2:

The managing agents will go through all suggestions ensuring they have public liability and are competent to carry out the work also complying with all relevant Health & Safety regulations at this point a lot of the residents suggestions fall by the wayside. The managing agent will also send out a specification of works to remaining contractors and will also include other contractors that are known to them.

Once estimates are received from contractors a summary of all estimates is sent out to all residents and provision must be given for residents to come and inspect the estimates if they so wish.

Stage 3:

If the cheapest estimate is not chosen then resident/leaseholders must be advised the reason why.

Now here is my argument:

Where a resident management company (RMC) or even a RTM company is charged with the running of their development surely Section 20 would not apply because the residents are the management company and the landlord/freeholder would have no involvement in the process?

It is usual practise for any large works even if they do not fall into the Section 20 regulation to go out to tender to three contractors anyway.

This theory however has not been proven either way and not many managing agents are overly concerned as they make a charge for the management of any Section 20 works.

So what would happen in the event that the RMC ignore their managing agent and do not follow the procedure?

IF successfully challenged with the LVT residents/leaseholders would only be responsible for paying £250 each and the remaining monies would have to be met by the RMC.

See the confusion the residents/leaseholders are all members of the RMC!

Management Fees based on a % of service charge?

I often find the ideas for these blogs from speaking to people on the telephone regarding problems with their current managing agents. A lady called me today not happy that their current agents have increased their management fee.

She lives in a block of 12 flats where the landlord employs the managing agents. Their managing agents used to charge a percentage of the service charge as their fee but have now adopted a per property fee which has increased the service charge by nearly £500.

When she enquired with them why, they replied they were simply following the ARMA and RICS Service Charge Code and have amended all their management agreements.

 
OK we also follow the RICS Service Charge Code but with regards to management fees they advise it is BEST PRACTICE to base this on a per unit fee they however do not say that you cannot charge a percentage fee. For some developments it is more beneficial to be on a percentage fee, especially the smaller developments.

RICS and ARMA’s argument is that if a percentage fee is charged a managing agent may increase other service charge costs and subsequently increase their fee. My argument to that would be that RICS and ARMA haven’t taken into account that landlords and residents have a much wider knowledge of expected running costs.

This is why we base our fee on whichever is more beneficial for the individual development be it a fixed per unit or percentage fee, we also will review and alter our fees annually to ensure that as well as other service charge expenses our fees are also kept to a minimum.

I also advised her, as I always do in the first instance to speak to the landlord who in this instance is a well-respected local builder and if her current management agent is not prepared to revert back to a percentage fee then I would be more than happy to manage her development and it would appear also at a lower percentage fee than that was previously charged.

It is also Block Manager’s policy where we are appointed by any landlord to involve the residents when it comes to matters relating to their development including the setting of the service charge. This really impressed her as she had lived on the development for nearly 10 years and the only communication her and the other residents received was the service charge demand dropping on the door stop every year!

At last some real protection for leaseholders!

I have just heard today that Block Managers Limited has been awarded accreditation status by the Leasehold Knowledge Partnership (LKP). 

For those not in the know the LKP was founded by leaseholders who continue to campaign against leasehold exploitation in the industry by other managing agents. On the board is Melissa Briggs an active campaigner who is responsible for the CarlEX website and Sebastian O’Kelly a property journalist with the Mail on Sunday who has highlighted the actions of unscrupulous managing agents.

The LKP was set up to protect leaseholders in light of past and present Governments, refusing to regulate managing agents or change leasehold law. Already a number of managing agents and property developers have signed up. 

Existing associations and trade bodies give guidelines and advice but do not enforce these guidelines the LKP does and will disqualify any accredited company who do not follow their rules and regulations.

Block Managers too would like to see changes in leasehold law if only to restore some faith in our industry but until such time we are not only proud to follow, but also agree with LKP’s rules and regulations. 

At last some real protection for leaseholders!

Changing the face of managing agents?

After a meeting this week with a group of resident directors I have to admit to being surprised on what an impact Block Managers is having on the block management industry in Essex.

Incidentally we do not just cover Essex we can manage any development in a 40 miles radius including London.

I am now questioning whether it was such a good idea publishing not only our fee structure but how we go about reducing service charge costs.  I guess that’s what being 100% transparent does for you, not only are our potential customers seeing this information so are our competitors.

Whatever way you look at it this is good news for all leaseholders who will hopefully benefit from reduced service charges and a better service whoever they appoint as their managing agent?

One thing I would like to ask of anyone considering either staying with their current agent or using another agent is why only now are they choosing to alter their managing remit and pricing structure and are they going to refund back to the development the previous higher priced management fees and other added extras they received when managing your development?

Anyone of them could have adopted our business principles years ago but chose not to, I wonder why?

I had adopted the slogan ‘Not all managing agents are the same!’ perhaps I need to reconsider changing that to  ‘Changing the face of managing agents!’

Never A Dull Moment

Well the dullest month of the year is nearly over. Although going by the weather you would be forgiven thinking Spring had arrived early.

 Usually during the winter months we are inundated with weather causing problems but it hasn’t been the case this year not a car stuck in the car park or guttering blown off a building in sight, gardeners have even reported flowers already are starting to bud. Whether this mild weather will continue who knows, this is England after all and we could have six inches of snow on the ground next week.

 January however is a busy time for managing agents as we need to finalise all accounts for those developments that had a December year end, collating and printing off all information to send to the accountants so that the company accounts can be prepared.

It is even busier here at Block Managers as we have opted to use an accounting system where individual files are created for each financial year as opposed to simply rolling on. Fortunately data is automatically transferred from the previous financial year which saves on a lot of manual inputting of data.

 January is also the time of year where we receive many new business enquiries. With Christmas now out of the way residents are reviewing, like many of us, their expenses and looking to save money.

On a personal note I just received my car insurance renewal and instantly by going online saved nearly £200 and I am getting a free cuddly meerkat thrown in for good measure – simples!

 With many residents finding they are paying more in service charges than they are in council tax they are looking more closely into these charges too and finding like most things in life they can get a better and cheaper service elsewhere and are calling us. It is good to know that last year’s radio campaign did have some effect even if we don’t throw in a cuddly toy!

 Over the next few months as well as dealing with new business enquiries and taking on the management of new developments I ensure service charge payments are being paid both on time and at the correct amount. Any managing agents will tell you this is one of; if not the most important job they do after all developments rely on these regular payments to survive. Meetings also have to be arranged with resident directors to get the just prepared company accounts reviewed and signed before filing them at Companies House.

Once that is done then perhaps I can relax? Unfortunately not it all starts again for those developments whose financial year ends in March!

I can honestly say there is never a dull moment in the world of block management it may seem repetitive at times but there is always a challenge of some sort waiting around the corner and now and again you will pick up the phone and it will be someone who has gone out of their way just to thank you for doing something as simple as fixing a banging communal door!

Change of Landlord's Attitudes

One thing I have noticed, what with the current financial climate is how leaseholders expectations have changed. 

A managing agent in the past would tout their business to the leaseholders who actually lived on the development as the buy to let landlords were not concerned as the rent they received easily covered the service charge. 

Today, with so many flats being built around the country the amount of rented accommodation out there has increased dramatically. 

If the rental income is £600 per month and £100 of that is going on service charges that is a considerable amount of money which is no doubt why landlords are taking a much keener interest in the developments.  

Unsurprising I have found that many landlords become directors of RMC companies  as not only do they want a good looking development that will attract tenants but they want running costs regularly reviewed and kept to a minimum. 

What is surprising is the lack of interest from the residents who actually own and live on the site or maybe that's because the landlords, in their role as directors of the RMC are doing such a good job!

The Changing Face of Developments

When I first started out in block management many moons ago developments were a lot different to many managed today. The only shared facilities that needed managing were the communal hallways, car parks and gardens. 

However, today’s modern developments can consist of not just mixed tenure properties but a wide array of communal facilities.  

It is not uncommon to expect some sort of controlled parking; gates, barriers or even underground car parking and residents are expected to share fewer visitor parking spaces which can lead to parking problems on an otherwise peaceful development. 

Developers are now building developments which resemble hotels with porters/concierges, lifts, gymnasiums and even swimming pools. 

At first glance these types of properties do appeal to buyers but when you look closer into the cost of maintaining such services it is not surprising that soon the services that once appealed are scrapped to save money. It was a novelty at the beginning to use the communal gymnasium or collect your post from the porter/concierge but when residents realised they were paying hundreds of pounds a year in service charges for such luxuries it isn’t long before the gymnasium gets shut and another person joins the unemployment line. 

Any potential buyer should always consider before purchasing a property what communal services are included on a development as they do come at a cost and any developer should strongly consider if there is a market for this type of development in the area?

How transparent is your managing agent?

Block Managers promotes and offers 100% transparency to its clients.

Income is only generated from the management of a development and the only sources of our income are:

·        Annual management fee collected on a month by month basis which is calculated purely on the number of properties on a development

·        Dealing with solicitor’s enquiries when a property is sold supplying information and documents. (charged to seller)

·        Service charge arrears when a resident fails to make service charge payments and further recovery action is required (charged to debtor)

Some managing agents however make additional charges for managing a development or find other methods of supplementing their income and in most cases this can only increase service charge costs:

·         Additional charge to act as Company Secretary

·         Additional charge for dealing with insurance claims
·         Additional charge for dealing with S20 or large works

·         Additional charge for provision of out of hours emergency service

·         Commission from placing block insurance with a broker

·         Commission for using a certain contractor or service provider

·        Use of an associated contractor or service provider where there is a connection between the managing agent, same board member etc.

·        Use of client accounts for the collection of service charges where the managing agent may earn interest from payments received.

Of course they will tell you that they have allowed for any of the above means of income when calculating the management fee your development pays!

Regulation of Managing Agents

There is much confusion surrounding the role of a managing agent and whether to regulate them or not.

The local and national press have highlighted various Leasehold Valuation Tribunal (LVT) cases where managing agents have been found to be taken excessive insurance commissions or management fees. Unfortunately those with a limited knowledge of managing agents can tar other managing agents with the same brush.

Most of the cases where the LVT has ruled against managing agents are where the freeholder appoints the managing agents and the residents of the development have no say in how their development is run. I would therefore agree completely that when a freeholder appoints a managing agent that managing agent should be regulated to protect the residents else they are free to do as they please at the resident’s expense.

Laws have now been changed and residents can enforce the Right To Manage (RTM) and take complete responsibility away from the freeholder and there are many managing agents and legal firms who will gladly help you with this – for a fee or long management contract of course!

My advice for any resident not happy with their freeholder appointed managing agent would be to contact the freeholder in the first instance as they may be happy for the residents to select their own managing agent.

The developments I currently manage mostly all have a freeholder but there was also a Resident Management Company (RMC) set up, this is a limited company whose sole responsibility is  the smooth running of the development. Anyone buying a property on the development through purchase also became a member/shareholder of this RMC.

A board of directors is elected from the residents and they are charged to oversee the running of the development and to ensure the RMC complies with all relevant regulations. Usually the RMC will appoint a managing agent to deal with the running of the development and they will be responsible to the RMC and its directors. So in this instance the RMC and its directors are regulating the managing agent.

You could question whether the directors are competent enough to ensure that the managing agent is running the development properly, but in my experience I have found that although their role is voluntary directors of RMCs take the role very seriously and more than competent enough to ask questions of their managing agent with regards to costs and regulations.