Lots of people will be using the hiatus to normal life forced on us by COVID-19 to take a step back from the hustle and bustle of usual routines to take stock and re-evaluate our priorities.
For freeholders and leaseholders it might also include how you manage your building as well as having a spring clean in the home.
As a freeholder or volunteer director of a Residents Management Company, it’s likely you put a lot of effort into looking after both the building and the leaseholders who share it.
And the current lockdown may give you the time to assess if you are using your precious time efficiently and maybe conclude that you are expecting too much of yourself – and it’s time to share more of the load and galvanise support from neighbours.
Make a list of what you would like to achieve and prioritise. Don’t bite off more than you can chew. As some things can probably wait until next year. We’ve suggested just five below to help get you started.
Most important don’t try and do everything yourself – share the load with your co-directors or co-opt other residents.
And decide what success will look like to you, whether that’s having the company accounts done well before deadline, having 100% service charge receipts in the bank, or finally getting agreement to have the lobby smartened up.
Resolutions are not just for New Year!
Check the list below for some ideas – you may want to add other goals or create a totally different list.
Whatever you do, make sure your goals are realistic and achievable within the timeframe you’ve allowed yourself.
This is meant to be an opportunity to review and learn – not a marathon ‘to do’ list that will keep you awake at night.
- It can seem a thankless job
Thank yourself and don’t over-commit or accept unnecessary personal liability.
There will always be complaints and issues, in even the smallest block of close neighbours and friends. Deal with them but don’t dwell on them – it’s not you, it’s the building! Take time to ponder on the good that you do and what you have achieved.
If you’re the director of a residents’ management company, ask yourself honestly if you have time and energy to serve another year. Check also that other directors are also willing to remain in office, and what their plans are. If they have retirement plans looming, now might be the time for some succession planning.
Look after yourselves legally and financially too. You may be a volunteer, but you could still be held personally liable for losses and face claims against your personal assets – including your own home. Mistakes do happen, and if they give rise to a claim, you deserve the protection of Directors’ & Officers’ Liability Cover.
Your broker should be able to assist in arranging this cover. Take time to really understand what you have taken on.
If you are a volunteer director of a limited company – it has implications for you personally. There are useful guides from companies house for directors of property management companies set up by developers and for Right to Manage (RTM) companies set up when leaseholders combine to take over the management of their block, usually with a view to controlling costs and managing the building more effectively.
For RTMs, there’s a useful interactive learning tool online. It covers the key areas of registration, being a director, record keeping and filing accounts – 30 minutes very well spent.
Remember that failure to file accounts correctly can lead to the company being struck off. That will be neither easy to explain to your neighbours and is likely to be a hassle to put right.
- Review the agreement you have with your managing agent
Is it still fair to both parties? Does it cover everything you need? Are there simmering problems or resentments that need to be put in the open and nipped in the bud?
The Association of Residential Managing Agents provides useful guidance on how the relationship should work. The Leasehold Advisory Service’s information also helps on how to approach ending an existing arrangement. The Royal Institution of Chartered Surveyors (RICS) also publishes a guide for management of residential properties where service charges ae payable.
- Get the finances 100% in order
Tie up loose ends, reduce any arrears and ensure accounts are up to date. Having a firm financial foundation will make management much easier. Everything else follows from this. Make sure your records are up to date, so you can send friendly and timely service charge reminders, but also be prepared to take formal action to recoup arrears if necessary.
Do make sure your service charge demands are correct: The Landlord & Tenant Act is very specific about how service charges must be demanded. Each invoice must be accompanied by certain documents set out in a prescribed format. Correcting errors is time consuming so, even though you may be dealing with the best of friends, but you still need to follow these procedures.
- Start to prepare the ground for major works
Even in the smallest block, a building converted into a few flats, you do need to follow the prescribed “Section 20” consultation process before you start incurring costs if that is going to involve a bill to any leaseholder that exceeds £250. Without the consultation, you may find that you can recover no more than £250 per leaseholder, whether you’ve spent £1000 on the communal entrance or £10,000 on a new roof!
The process involves many stages and can take many months – so the sooner you start the better. Do check the lease as it may set out specific timescales for big-ticket maintenance activities, such as exterior redecoration being done every 7 years. Such big expenses need to be planned for.
Rest assured that if you need to undertake genuine emergency works and it isn’t practical to undertake a lengthy “Section 20” consultation, you can apply after the event for dispensation from consultation.
You’re probably doing all these things anyway – in which case focus on number one and thank yourself for a job well done!
This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note we have relied on information sourced from third parties and we make no claims as to the completeness or accuracy of the information contained herein. It reflects our understanding as at 13 May 2020, but you will recognise that matters concerning COVID-19 are fast changing across the world. You should not act upon information in this bulletin nor determine not to act, without first seeking specific legal and/or specialist advice. Our advice to our clients is as an insurance broker and is provided subject to specific terms and conditions, the terms of which take precedence over any representations in this document. No third party to whom this is passed can rely on it. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to fullest extent permitted by law. Should you require advice about your specific insurance arrangements or specific claim circumstances, please get in touch with your usual contact at Deacon.