Block Management Special – Should you self manage your block?
How?
As a flat owner you are able to obtain management responsibilities in different ways. You might be able to purchase the freehold of the building. Alternatively, you could claim the right to manage (RTM). In some cases, usually small properties, landlords are also happy to hand over management responsibilities to their tenants. For further information see The Leasehold Advisory Service and The Right to Manage Federation
Why bother?
Generally speaking, the most compelling and common reason is to get rid of the landlord. Some leaseholders are suffering from mismanagement of their property and want to put an end to high service charges. Others want to have a greater say in how the building is managed and save money in terms of maintenance and repairs. This makes sense. After all leaseholders have forked out thousands of pounds to own to their own properties and want to have a stake in how their block of flats is managed.
Responsibilities and Liabilities
With the ability to obtain management responsibilities also come significant duties and responsibilities under legislation and the lease. It is important to be aware of what is involved before deciding whether your property should be self-managed or by appointment of a professional management agent. Below I have set out some of the responsibilities and liabilities:
Running a limited Company
No matter who manages the block of flats, the actual management is carried out through a private limited company (RTM; Right to manage company, see also: https://www.gov.uk/set-up-property-management-company). As a company, you will be bound by Company House guidelines and you will have to appoint a board of directors. Time has to be set aside for board meetings and other duties such as compiling and submitting annual returns. The board of directors will be responsible for the day to day running of the company and has to make sure that the company stays solvent. So leaseholders who regularly avoid paying their share could jeopardise the solvency of the company.
Covenants
There is no standard lease. Each lease contains different covenants. Leaseholders who manage their own building have to ensure that they fully understand the lease and that all the covenants are being enforced. Failure to do so can result in legal action or tenants withholding rent. Lessees’ usually have the right of “quiet enjoyment” of their flat, and a management company would have to ensure that this has not been breached. At the other side of the spectrum the management company would also have to make sure that the tenants or leaseholders have not neglected their duties. These breaches might include subletting without permission or carrying out unauthorized building work. Would you for example know what to, if a tenant failed to pay their service charge, because of redundancy? Or, how would you deal with antisocial behaviour by one of the tenants? This not only requires an in-depth knowledge of the law and how to enforce it but it can also be very awkward to deal with fellow leaseholders and neighbours over breaches of the lease or other sensitive issues.
Maintenance of Block of Flats
It might sound obvious, but you and your fellow leaseholder would be in charge of managing repairs, maintenance and anything else concerning the block of flats or its grounds. This also includes the provision of services such as ground maintenance, heating, lighting in common areas. In terms of building maintenance, the responsibility is two-fold. Firstly, it involves maintaining the building to a standard required to sustain it and to add to its investment value. Secondly, it also consists of knowing and planning for preventative maintenance to keep ongoing running costs at absolute minimum. At a practical level this means having to find and employ contractors to carry out the necessary work. Would you know where to find competent contractors? Do you know what the going rate for the work in question is and would you be able to negotiate a competitive rate The “ RTM company must adopt a responsible attitude to the long-term maintenance aspects.” It “cannot save money by reducing essential services or by allowing the block to deteriorate. The covenants in the lease require the property to be maintained as it becomes necessary, not when convenient.” http://www.lease-advice.org/aboutus/
Compliance with the Law
Apart from company and housing law, the company and its directors are also legally required to comply with a wide range of health and safety law. Did you know that the common parts of a building become a place of work and as such have to be in accordance with Health & Safety regulations? Keeping abreast of the ever-changing government legislation is a job in itself. There is for example a legal requirement to inspect and test electrical equipment and to maintain an asbestos register. Sometimes it is more complicated than just organising an inspection. For example “In order to have your boiler and flue passed as safe by a Gas Safe engineer, you would need to ensure that the entire length of the flue can be inspected. Where the flue is inside ducting, a wall or a ceiling, you will need to install an inspection hatch, or hatches, so that access is available throughout the length of the flue.” (See Industry Today)
Ignorance of law is, of course, no excuse. Failure to comply with the different laws and regulations might not just result in a substantial fine but a prison sentences for those responsible for the upkeep of a building.
Flexible approach to Block Management
At May & Co we understand that you want to be in the driving seat, when it comes to managing your block of flats. We are an accredited Block Management Company and can offer you a flexible approach. This allows you to select the level of service you require. You choose. We can do all of the block management for you or just the parts you don’t want to do.