Why does the building need to be managed at all?

A building will not manage itself, and there is much to be done if the leaseholders are to receive the services promised in the leases and the building kept in good repair; insurance needs to be put in place and renewed on time; bills need to be paid and services maintained; local authority and legal requirements must be met. The leaseholders' capital investment in their flats must be maintained and their individual rights of enjoyment of the flats ensured.

No matter who manages the building, there are certain tasks to be carried out; there is little variation in these whether the building is a house converted into a few flats or a substantial purpose-built block or estate.

Careful forward planning is necessary in terms of major works of repair, both in the specification and pricing of the work and, perhaps more important, in the financial provision for them. The terms of the leases providing for collection of service charges may not necessarily be compatible with the immediate funding needs of the management company or the building. Accurate planning and collection demands an assessment of the needs for the year ahead.

Whoever is responsible for the management of the building - whether it is the actual landlord or the leaseholders in the form of a resident management company or Right to Manage company acting as the landlord - will have significant duties and responsibilities under the lease and under legislation. It is essential that the manager fully understands and appreciates these responsibilities if the residents are to receive the services due to them and the building is to be maintained.

Duties and obligations
Management of a residential block of flats is a largely practical exercise and demands considerable effort, time, organisational skills and care. The physical fabric of the building must be regularly inspected, maintained and redecorated to the required standard and at the required times. Assessment of any necessary work may require professional expertise. Monitoring and approving the finished job may demand a qualified surveyor. Work will not always be properly executed and some members or lessees may well refuse to meet the costs at the expense of the company, which can cause friction and dispute.

Systems must be put into place to estimate and to collect the money required for works and services and the company will need a full understanding of how the lease permits the charges to be raised, in advance or arrears. There must be sufficient accounting procedures in place to provide final accounts and the annual statutory summaries to the leaseholders. Although the company is the landlord, the accounts must clearly distinguish between the financial affairs of the company and those of the landlord; for example, the company cannot pay corporation tax from the leaseholders' service charge account.

In cases where a resident is in default of his or her lease, in non-payment or arrears of rent or service charges or in breach of a clause of the lease controlling the use of the flat (subletting, for example), the manager will be required to take action; this can include threat, or ultimate use, of forfeiture and possession proceedings. Resident management companies may feel uncomfortable in direct action against a fellow leaseholder and consider such actions better carried out by an independent professional.

Do you need a professional agent?
There are many benefits of professional management, which must be balanced against the fees which member and non-member leaseholders will have to bear. Professional managing agents will bring an organised approach to the planning and collection of the service charges and reserve funds, the timetables for redecoration and repairs and inspection and supervision of works. Their assessment of what must be done, and when, will be independent of private interests and preferences and based solely upon their duty to all residents 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 of the company. A managing agent should 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.

Issues and disputes can be dealt with impartially by an arms length agent to limit the animosity and division, which could arise, where personal issues become the business of neighbours and colleagues. 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.

 

Management is a full-time affair and a managing agent should have the essential infrastructure to deal with the management of leasehold property efficiently and expeditiously.

 

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