If you are a member or even a director of one of the many property management companies for condominiums or leaseholders responsible for the upkeep and repair of apartment blocks or apartments, what do you think?
Does your company really need the comprehensive property management advice from the professional property manager? Or is such a move just another waste of utility funds?
More and more directors and shareholders are switching to hiring specialist real estate agents to share responsibility and advise and guide their property management company through the labyrinth of legislation surrounding the housing sector.
However, many others are resolutely staying the course and continuing to run their businesses and their properties in-house.
So what is all this legislation and what else do the directors and decision makers ultimately responsible for the management function need to know?
Current legislation in England and Wales is largely defined by established landlord and tenant law, later revised by the more recent Common hold and Leasehold Reform Act 2002.
In summary, all the conditions contained in an apartment rental agreement cannot be maintained if they do not comply with the applicable legal provisions. As a result, portions of the Rental Agreement may not be enforceable and may be deemed unlawful. This means that the members Block Management London and directors of the property management company must comply with the legal requirements as best they may have read and understood the property lease.
Management of condominium blocks therefore requires knowledge and expertise of how the law varies the terms of the interpretation of the lease.
The Regulatory Reform Ordinance (Fire Safety Ordinance) brought significant changes. The new fire safety regulations came into force on 1 October 2006 and affect all non-domestic buildings in England and Wales.
If you are responsible for non-residential buildings, you must act by conducting or arranging for a fire risk assessment. It is an ordered assessment of work activity and the workplace, now by definition encompassing the common areas of your living quarters. It is therefore an essential part of your block management tasks.
The risk assessment aims to identify potential fire hazards for residents, employees and visitors who could be at risk in the event of a fire. They should assess the risks posed by the hazards and decide whether the existing fire safety measures are sufficient or if more needs to be done.
Not using the services of real estate management agents means that the members and directors of your management company must comply with regulatory reform (fire safety) regulations.
The Data Protection Act regulates how personal information you hold is used by organisations , businesses or the government. Everyone, including you, who is responsible for the use of data must adhere to strict rules known as “Privacy Principles”. In summary, you must ensure that the information you possess is:
- Used fairly and lawfully
- Be used for limited, specifically indicated purposes
- Used in an appropriate, relevant and not excessive manner
- Are not retained for longer than is strictly necessary
- Treated according to people’s privacy rights
- Kept safe and secure
- Not be transferred outside the uk without appropriate protection
There are stronger legal protections for more sensitive information, but the information above should be enough to alert you to the need for compliance.
Not employing an agent to provide property management services means that the members and directors of your property management company must be familiar with and comply with the Data Protection Act and the “Privacy Principles”.
The above examples are just a few of the many areas of property management that are affected by ever-increasing legislation and bureaucracy.
Other important matters affected include the treatment of utility bills, tenant rights, landlord notifications required by law, extended powers conferred on the LVT or leaseholder court, consultation procedures for qualifying works under Section 20 of the Common hold and Leasehold Reform Act and disenfranchisement and new principles for the Right to Manage, which grants tenants in qualifying properties the right to assume management of their properties.
If you are familiar with most of the above block management laws and have the time available, you are probably well informed and able to manage your property or block of flats.
However, if you have found that this article has provided you with new information, you should consider seeking professional advice on how to manage your business and wealth to ensure you are not at risk.
While directors’ and officers’ liability insurance is available to protect you in the event of negligence, it is debatable to what extent it covers those who are believed to have intentionally disregarded the law. It is particularly important to know that any serious violation of health and safety regulations will be treated as a criminal offense which can result in a heavy fine or imprisonment.
Do I need to remind you that ignorance of the law is no defense and indeed property management legislation is no exception.
VFM Block Property Management Agents is a property management company providing residential property management services for blocks of flats, apartments and private lots
VFM Chartered Surveyors are Block Management London brokers for landlords, homeowners and tenants of blocks of flats and apartments.
Beware of management agents who perform RTMs without due diligence – it can cost you
Administrators leave tenants themselves to load the necessary information for their entitlement to the right of administration through an online facility without paying due attention to the entered information, only for tenants to make a critical mistake along the way and derail their application to the administration agent arrives to send the necessary communications.
When undergoing the Right-to- Manage process, it is important to carefully follow the legal steps to ensure a successful application.
Managers evade responsibility
The administrators disguise themselves by claiming in the fine print that they are not responsible for ensuring that the tenant enters the data correctly and that the tenant is responsible for any complications in submitting the appropriate forms.
Two recent examples of failures from this approach, involving the same agent, demonstrate the risk to tenants who are ultimately held responsible for oversight.
A block in Newcastle consisting of over 70 apartments appointed the above management agent to assist them with their tenure application as they consider their block management options.
Tasked with eliciting support for the process from his fellow tenants, the tenant had them confirm via email that they wished to participate in the process, but decisively invited them to become members of the RTM business without Having the formal enrollment forms issued is required at this point in the process.
When the landowner then requested clarification that the required 50% of the block’s tenants were confirmed members of the company, the request was denied as the coordinating tenant had failed to issue formal membership forms to his fellow tenants and consequently none of them had become technical members of the company.
Although the application was supported, an administrative error caused by the managerial body’s failure to exercise due diligence at each step of the process led to its rejection, although the body itself declined any responsibility on the matter.
Tenants held accountable
as sole member of the RTM company may now be solely responsible for paying reasonable expenses of £3,500 deposited by the landowner. In addition, a further £1,800 in management agent fees recovered from tenants were non-recoverable despite the unsuccessful application.
In another case, a block of seven apartments in Swindon wanted to proceed with the Right to Manage. With the same executive officer appointed to support the process. Six tenants registered their data via the online system.
The agent prepared the damage report on behalf of the tenants based on the information they provided. Unfortunately, the tenants had only entered the details of the six people assisting the process and crucially neglected to register the details of the seventh tenant.
The landowner successfully challenged the RTM claim and the application was denied – all because the manager had failed to exercise due diligence to ensure the details were entered correctly and the steps were followed exactly.
The six tenants came no closer to the right of management, despite paying the management agent a fee for “managing” the unsuccessful process, in addition to covering the landlord’s reasonable costs.
The Lesson: Renters who want to get better value for their money by appointing a management agent instead of an attorney to help them through the RTM process should ensure that the agent handles their case with due diligence. Otherwise, tenants could be faced with a denied application and, worse, a hefty fee with nothing to show for it.
Tenants should ensure that the manager has a 100% record of successful Right to Manage applications as there really is no reason why this should not be the case. We urge tenants to ask themselves why any management agents have anything other than a 100% success rate.
Follow the link for more information on the right to administration.
Urban Owners is the pioneering provider of block management services. Our innovative blend of sophisticated web-based communication and management tools, professional guidance and on-site support puts tenants in control of their block, lowering service fees and improving block services.
Are home ownership management services improving?
As a director of a leading property management company, I am acutely aware of the need to improve condominium management services. While the real estate services profession needs to repair its tarnished image in this specialty , may I suggest that clients can play a key role in this process by raising their awareness. Finally, landlords, tenants, landowners and resident management companies are instrumental in the selection of their block management agent.
As a builder or landlord, when it comes to hiring a property manager or agent to manage your utilities, wouldn’t you benefit from checking the basics more carefully? Why not think about how to better define your real estate service needs? By applying a few relatively simple, sensible measures, you can avoid the trauma of hiring an inferior block manager. Real estate companies, landlords, residents and tenants would certainly be well advised to work together to find properly qualified and regulated administrative agency firms. Easier said than done, I hear you say?
The apparent decline in managers’ professional standards could certainly be influenced, if not reversed, by clients’ refusal to settle for cheaper, poor quality real estate service providers. When hiring a new freehold agent, clients should ask candidates to clarify the real estate services standards to which they work. It must be ensured that the service levels offered match the requirements and that this is ultimately confirmed in a formal service contract. There are various codes of conduct that could be considered but RICS seems to have paved the way forward.
The latest RICS Service Charges Residential Management Code was passed by Parliament in 2009 with the aim of setting the standards of the profession in the light of new legislation. If your block management agent does not comply with this code, questions should be asked and any concerns should be investigated and resolved. If a company claiming to be a competent homeowners specialist fails to comply with this RICS code, I would strongly advise that something may be wrong.
Looking now at the ever-increasing legislation that applies to residential real estate services, some fairly significant changes have been introduced in recent years. There is a new and specific block management and service charge regime under the Common hold and Leasehold Reform Act 2002 . Revised health and safety regulations have also been enacted, affecting the treatment of condominiums in apartment blocks. Landlords and managers are now required to provide workplace and fire risk assessments for the landlord’s property or common areas.
When the new legislation comes into effect, the more qualified and experienced professionals should be well placed to advise clients and guide them through the new requirements. The latest RICS code should also help weed out condominium managers who are unable to meet the required standards.
Right to manage your own block of flats
How many times in the past have we heard friends or colleagues say they have problems with the management companies that take care of the apartment blocks they live in. From dirty communal parts to leaky roofs, from inflated management fees to unexplained bills cropping up for work done on your block.
Well, now there is a legal process you can go through to do the administration yourself or hire an agent you trust… Nobody minds paying a fair price for a good service from an administrator who knows their stuff Duties fulfilled under the terms of the lease, but there are some real horror stories of tenants being chased through hell by unscrupulous landlords or their managers. The abbreviation for “right to manage” is RTM and your block qualifies if:
The property consists of a closed building or part of a building.
A part of a building is self-contained when it has a vertical division, could be independently renovated and has or could have its own service.
Your building must contain at least two apartments.
At least two thirds of the tenants (apartment owners) must qualify.
To qualify, the original lease must be greater than 21 years.
There is no limit to the number of condos one person owns.
Commercial/non-residential buildings must not account for more than 25% of the total floor area.
You don’t have to manage the block yourself, nor do you have to buy building insurance, but that might not be a difficult task when there are half a dozen apartments or so.
You will definitely save a lot of money with building insurance, as the insurance broker usually receives around 25% commission on the premium. For example, if your premium is £3,000 a year, you will save around £750 each year! There are many companies out there advertising and offering special offers for RTM companies so it’s always worth checking out. It is not uncommon for a block management company to manage your block and allow you to take care of building insurance.
Unlike the bad old days, renters have a lot more rights now, so make sure you know what they are. Most landlords are professional and manage their blocks without getting in trouble with tenants, but it’s nice to know that if you’re at the mercy of an unreasonable landlord, you can now take action.