What is a residential managing agent (MA)? A block of apartments is, typically, owned by a landlord (the ‘freeholder’). In some cases, the owners of the flats have bought the freehold collectively and are shareholders in a freehold company formed for that purpose. In others the leaseholders have joined together to form a Right to Manage (RTM) company. The day-to-day running of the building is the responsibility of the freeholder/RTM and, particularly for larger blocks, a managing agent (MA) is usually contracted to help run the site, arranging contractors to attend to repairs, raising funds from the leaseholders and so on. A useful website for more information is http://www.arma.org.uk
What are the landlord’s/RTM’s responsibilities?
Management functions are defined in the legislation as 'functions with respect to services, repairs, maintenance, improvements, insurance and management' and will typically include: Repairs, redecorations and maintenance of the structure of the building and the common parts (under the terms of the lease), including cyclical or seasonal maintenance and the maintenance of plant and facilities, lifts, and central heating boilers Provision of services – the lighting of the common parts, heating, cleaning, grounds maintenance, caretaking and porterage Arranging the insurance for the building Levying and collection of service charges, accounting and the provision of statutory and other information Compliance with all statutory requirements relating to the management and fabric of the building, plus day-to-day management of the building. Management functions do not include: Management of any non-residential parts of the building – commercial units, shops or offices, garages or storage not included in the leases Any non-qualifying flats and functions relating to forfeiture and possession. As noted often a managing agent (MA) is hired by the landlord/RTM to fulfil these duties on their behalf, but it must be remembered that the ultimate responsibility still remains in the eyes of the law with the landlord/RTM.
What is the best sort of contract to use with a managing agent (MA)?
Many managing agents have developed their own contracts over time. So whenever you change over your managing agent, you will have to obtain legal advice on the new contract. To overcome this, ARMA has introduced a standard contract which all members are recommended to use.
What is a service charge?
The service charge is a contribution from each leaseholder (in accordance with their lease) towards the expenses of running a block of flats. The service charge is designed to cover items such as utility charges for the common parts, buildings insurance, redecoration of the exterior of the buildings and the interior common parts, cleaning, health and safety etc. It does not cover items that are within individuals flats – these are for the leaseholders themselves to arrange.
Why do I have to pay service charges and do you let me know how my service charge has been spent?
Service charges are levied for the maintenance and management of the building. The lease for your property will stipulate what you are obliged to contribute to, how this is calculated, and when it should be paid.
Following the end of the development's financial year the annual accounts are prepared by an independent firm of accountants. A summary is sent to every owner and the accounts will be fully explained.
What are typical duties of a managing agent (MA) when managing a residential block of flats?
The managing agent will ensure that many essential things happen at your development and these are principally as follows: Managing the property on behalf of the landlord/RTM in accordance with the terms of the lease, current legislation and codes of practice
Providing services to leaseholders
Preparing the service charge budget
Issuing service charge demands
Collecting service charges funds
Collecting sums in advance to create a reserve or 'sinking' fund to ensure that sufficient money is available for future scheduled major works
Providing repairs and maintenance as set out in the lease
Producing the end of year accounts and reconciliation.
What kind of financial systems are required when running a managing agent (MA)?
Systems must exist both to estimate the money required for works - and to collect the money which will be required for works and for other services. The managing agent will need to be familiar with how the lease allows charges to be raised in advance of requirements or in arrears.
What kind of accounting procedures are needed to show the financial operations of a block management company?
Accounting procedures must show final management company accounts, and must set out annual statutory summaries to the leaseholders. The management company acts both as the landlord and as the financial overseer of all relevant matters relating to the apartment block, and the accounts must clearly distinguish between the financial affairs of the service charge and those in its capacity as a landlord.