Apartments are sold as a hassle-free, sit back and relax purchase, with an assigned professional management agent who will handle the cleaning, repairs and maintenance of the apartment block for a small monthly fee. Unfortunately this is not always the experience of many apartment residents and greedy, inept and vague is closer to reality.
If you’ve purchased an apartment, as part of your lease, you will be assigned a paid for management service which is an integral part of the leasehold apartment package. A monthly management service charge covers buildings insurance, maintenance and general repairs and everything from cleaning the communal areas to keeping the gardens tidy. Finding a good, reliable and trustworthy management agent to provide this service is relative to your enjoyment of your apartment. Find the right one and you’ll be living a stress-free, low maintenance lifestyle. Find the wrong agent and it’s stress-city!
An apartment management agent typically gets bad press in the UK, because the industry is unregulated and this can encourage unscrupulous practices. As there is no barrier to entry, anyone can start a management service company. In many instances, management agents are employed by the freeholder, many of which are actually connected to or run by the same company. And although there have been numerous efforts to make leasehold law fairer, leaseholders can be bullied by freeholders, paying exorbitant fees for maintenance of the buildings that bear no resemblance to the work done or services offered. And this is the biggest complaint, getting good value for money…
Because there are more than five million leasehold properties in England and Wales — and most are flats where the building’s freehold is owned by a company — this problem is all too common.
Are You Getting Value for Money?
All residents need to collectively determine the following; Has your management agent delivered on their initial promises? Are you are getting good value for money? Are you happy with the finances? Do residents feel the management agent has paid lip service, provided poor communication and failed in multiple areas? If the overall view is negative, it’s time to pull together and affect change.
What to Look for (Negatives) and AVOID:
- Not local to your apartment block. Hard to approach if things go wrong.
- Lack of clarity over costs and services.
- High charges relative to service provided.
- Will they openly supply invoices supporting actual products, jobs and service costs?
- Poor transparency on what percentage of the monthly fee will be allocated to the reserve fund (sink fund).
- Large profit mark-ups on our services (windows, etc) jobs (ext painting,) and products (combination locks).
- A lack of communication, interest and desire to help.
- Are they closely connected or linked to the trades people they intend to use?
- Do they visit the site often to do site inspections?
- Are they looking to offload work onto residents?
- Is their policy; If you don’t attend meetings you have no say, no right, no vote?
- Are your phone calls and emails ignored or answered and responded to promptly and respectfully?
- They are in the service business… are they approachable or do have an apparent disdain for customers?
What to Look for (Positives):
- Honest, integrity transparency and trust.
- Agent location is local to you, so you can make personal visits if required.
- Positive reviews and feedback, which ensures honesty, integrity & clarity.
- A strong web presence which shows they are current, efficient and like to do things different and better than the average.
- Effective use of technology to track the financials, with clear transparency for all residents?
- Assertively cutting costs on services, jobs and products to help you save money.
- Transparency with all costs, profits, spend and savings in the reserve fund.
- Robust communication with all residents equally and in confidence via phone, email and letter.
- Zero or small profit mark-ups on service prices (cleaners, gardeners, windows) saving you money.
- Zero to small profit mark-ups on product purchases such as internal heaters, maintenance and repairs.
- Will they openly provide trade invoices to support their costs and numbers upon request?
- Are the results of a consensus being taken into consideration for site improvements or just the voice of 1 or 2?
- Do they physically inspect the site on a timely basis to keep on top of repairs, maintenance and improvements?
- Ultimately, do you receive value for your money – is it a win-win deal for the agent and residents?
Is Change Needed?
As the saying goes “if you do what you’ve always done, then you’ll always get what you’ve always got”. If collectively all residents are unhappy with the current service, change should be implemented. If you are far from satisfied, it makes sense to move away from your current management service company ASAP. After all, time = money and if you stay put, you’re only going to get the same shoddy, inept, service and lack of transparency over the next 3, 5 10 years.
Alternative Management Options:
Option 1. Transfer to a new company. A lot easier than your existing service company would have you believe.
– Ensure more than 50% of residents want and vote for change
– Look at your current agreement with your existing service company and check the notice period
– Select a new management agent
– Initiate the transfer.
The Process to Self-Manage is:
– Ensure more than 50% of residents want and vote for change
– Ensure your apartment block qualifies
– Create an RTM company
– Serve a claim notice on the landlord
– Prepare to take over management of your company.
Questions to Ask When Looking for a New Management Agent:
- Are they accredited with ARMA (Association of Residential Management Agents)?
- Location, are they local to your apartment block and easily approachable?
- Monthly cost per apartment and annual service charges?
- Breakdown of all costs and budget estimates?
- What do you actually get for your money; services, jobs and products?
- Can you choose locally based trades people for the service and jobs, ultimately giving you control and saving money?
- If they provide the service, jobs and products what is their profit mark-up?
- Percentage of monthly fee allocated to reserve fund?
- Can you get access to the reserve fund balance as and when required or is it solely displayed on the annual financial statement only?
- What type of insurance do they provide and at what cost?
- Structure of the limited company and can residents set-up their own company so residents are directors, protecting the reserve fund?
- Do they use technology to offer an efficient and up to date, transparent service online?
- Online Notice Board for all residents to access with latest news, updates, developments, site improvements planned, costs, estimates, reserve fund voting tools.
- How often do they visit the site to inspect, to check the state for and schedule improvements?
- What is their communication process with residents; phone, email, letter?
- How do residents vote for their priority ‘Wish List’ site improvements, is it anonymous, or via meetings, is the vote made collectivity as a whole or do a select one or 2 make these key decisions?
- Do they have a Code of Conduct for all residents to adhere to?