Being a better year than 2020 should not be a big ask of 2021 – but there’s no harm in giving it a little nudge in the right direction.
Many of us used time during lockdowns and tier restrictions to sort, clean, declutter. We had a chance to get all our admin up to date and perhaps even re-evaluate our priorities.
How many times have you heard the saying don’t sweat the small stuff? To that we’d add: don’t let the small stuff turn into big stuff!
If you’re the director of a residents management company (RMC) or right to manage company (RTM), then now may be a good time to set some goals to make sure you stay in control of events and your workload in the year ahead.
Anyone managing a block of flats, no matter how big or small, will know how easily the “to do” list can grow. Do remember that, as a director of an RMC or RTM, you are a volunteer. Resolve to keep the workload in proportion.
Talk to your co-directors and make a list of what you would like to achieve and prioritise in 2021 and make sure you have a plan in place. We’ve suggested a few critical points of focus below to help get you started.
Protect yourself
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. You cannot please all the people all of the time.
If you’re the director of an RMC or RTM, 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 should consider the protection of Directors’ & Officers’ Liability Cover.1
Talk to your managing agent
If you employ a managing agent, when did you last review your agreement? Is it still fair to both parties? Does it cover everything you need? Are there simmering problems or resentments that need to be brought in to the open and nipped in the bud?
The Association of Residential Managing Agents provides useful 2 on how the relationship should work.
The Leasehold Advisory Service’s information3 also helps on how to approach ending an existing arrangement. The Royal Institution of Chartered Surveyors (RICS) also publishes a guide4 for management of residential properties where service charges ae payable.
Get the books 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.
Not least, make sure your service charge demands are correct: The Landlord & Tenant Act is very specific about how service charges must be demanded5. 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.
Plan ahead for big repair and maintenance jobs
Managers of any block, be it a converted house or a tower, need to follow the prescribed “Section 20” consultation process6 before you start incurring significant costs. There’s a threshold of £250; if the proposal is going to involve a bill to any leaseholder that exceeds £250 then you must undertake consultation. Without it, you may find that you can recover no more than £250 per leaseholder, whether you’ve spent £2500 on the communal entrance or £25,000 on a new roof!
The process involves many stages and can take many months – so the sooner you start the better. Always 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, communicated and budgeted 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 thank yourself for a job well done!
- https://deacon.co.uk/guides/directors-and-officers/
- https://www.lease-advice.org/advice-guide/appointing-managing-agent/
- https://www.rics.org/globalassets/rics-website/media/upholding-professional-standards/sector-standards/real-estate/service-charge-residential-management-code-3rd-edition-rics.pdf
- https://www.lease-advice.org/fact-sheet/service-charges/
- https://www.lease-advice.org/advice-guide/section-20-consultation-private-landlords-resident-management-companies-agents/
FP1588-2020
The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading as Deacon accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.