While they will loom large in the lives of people involved in running the residents management company (RMC) or right to manage company (RTM), for most leaseholders the best property managers are the ones they rarely hear from because the building runs smoothly.
In fact, you may wonder why you are paying their fees and think the building’s residents could do the job themselves. So, what do managing agents do?
While the job may look easy from the outside, property managers can be like swans – all calmness on the surface but paddling frantically underneath to keep things running smoothly.
There is no statutory obligation to use the services of a managing agent, but taking on all the work can be a big ask of volunteer directors of RMCs or RTMs.
If you are in charge of the building, usually through the right to manage or because leaseholders collectively own the building and/or have a residents management company, then poor management, unreasonably expensive major works, higher than average insurance premiums and unresponsive landlords should not figure in your lives. You will have it all under control.
Nevertheless, being in charge, and enjoying the benefits of that, however, does mean you have to do the legwork, which can be substantial.
Self-management without the assistance of managing agents is not easy. You need to be familiar with the terms of your lease, which is not always straightforward, and there is seemingly endless Landlord and Tenant legislation to get to grips with.
Preparing service charge budgets, and collecting and administering the funds can be complex.
An admin failure to observe the legislation to the letter can prevent you in recovering money with your landlord’s hat on, lead to criminal sanctions or invalidate the buildings insurance, to name but a few consequences.
None of that does any favours to you or your neighbours as leaseholders’ hat on! Remember you may wear both hats. (1)
If you self-manage, you’ll also need to negotiate contracts for services such as lift maintenance to employing a cleaner and gardener, and comply with companies house filings for the RMC or RTM, and arrange AGMs etc.
Why not draw up a checklist of what a managing agent might do, and consider whether it is something you’d want to contemplate doing alone? Then you can ask for some quotes.
The government’s free Leasehold Advisory (2) services publishes a useful checklist of what duties you might expect of an agent.
Remember, the duties of the managing agents are based on contract, not legislation. You are in the driving seat to out source as much or as little of the work as you want.
The many duties you may require help with can include:
- Finance: budgets, accounts, service charge collection and areas management.
- Liaison with residents: dealing with enquiries day to day and when flats are bought and sold. Dealing with insurance claims
- Repair and maintenance: long term planning and dealing with day to day matters.
- Lease compliance: ensuring that residents comply with the term of their lease and where necessary instructing solicitors and representing the freeholder in court and at tribunals.
- Staff management: covering employees and contractors.
- Board support: advising the the Board on correct procedures company secretarial work, risk management (fire safety, health & safety etc) .
Finding a managing agent you can trust?
Regulation of Property Agents (RoPA), will include letting and managing agents in England, is coming, but not yet. It was first proposed in 2018, with a working group laying out a new regulatory framework in July 2019.
This was followed by a consultation on the draft proposals for a new regulatory framework. Watch this space …
Meanwhile, the best assurances of quality will probably still come by word of mouth, as will finding a company that has been established for a good few years.
Look for members of established professional bodies like RICS (3) and ARMA (4) (Royal Institute of Chartered Surveyors and Association of Residential Managing Agents). You might also find ARMA’s booklet (5) on the duties a managing agent can undertake useful – if not daunting – reading.
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.