Many property investors find themselves owning not only leasehold apartments, but sometimes freehold properties where a Management Agent is involved in managing the day to day upkeep of the communal areas of the development.
We have found ourselves in this position with a couple of apartments that we own. As time has gone on, we found that the Managing Agent in question not only increased their fees and the service charge almost year on year. But it’s fair to say that most years we were met with a request for us to pay a shortfall that had arisen because they had failed to keep to budget !
For those of you who aren’t familiar with the set up at such developments, they can be set up in a number of ways. These are two of the most common ways:-
- The developer sets up a Management Company at the development, this makes it easier to collect service charges and makes transferring the ownership of properties much easier when people buy or sell. The leaseholders can choose to become directors of the Management Company; they can then play an active role in liaising with the Management Agent. This way they can not only ensure that any work carried out at the development stays on budget, but that work that the residents would like to be carried out to improve the development is done, to name but a couple of ways.
- No Management Company is involved; here the freeholder invoices the leaseholders directly, therefore the leaseholders are dealing directly with the freeholder.
- No management Company but the leaseholders exercise their right to manage and set up their own Management Company.
As you can probably gather it can be quite complicated with a lot of hidden pitfalls. For instance there can be situations where the freeholders are directors on the Management Company and own a majority of the properties at the development. They therefore hold a majority when it comes to voting !
Another thing to be aware of is that people who own leasehold apartments or houses have numerous legal rights, whereas people who own freehold properties haven’t really got any legal rights regarding the Management Company. This can cause an awful lot of problems; furthermore they have no legal recourse to a tribunal either.
We already see more and more developments sprouting up where a Management Company is involved and the properties are freehold, so it’s definitely something to be aware of.
Coming back to our situation. In our case, it was partly our own fault because we didn’t choose to play an active role by becoming directors of the Management Company. It’s also fair to say that the two leaseholders who were directors on the Management Company weren’t exactly encouraged by the Agent to be actively involved. In effect they were just there in name and were only ever asked to sign off the end of year accounts !
The final straw came, when once again we received the end of year accounts and we were landed with an invoice for a shortfall of just over £153 ! So you can imagine the delight of the other 70 plus leaseholders who also received the same invoice.
Needless to say it was the straw that broke the camels back as the saying goes. Fed up with increasing charges year on year, with paying in excess of £25,000 a year in Agents fees and with shoddy workmanship being carried out on site which wasn’t being overseen by the Agents we decided enough was enough.
A number of leaseholders, us included attended the AGM; which interestingly was the first one to be held in a four year period ! We suspect the Agents called an AGM because they got wind that leaseholders had had enough and were looking at other options. A further nine leaseholders myself included put ourselves forward to become directors of the Management Company, thereby increasing the number of directors to eleven.
Now eleven strong we decided it was time to take action and we balloted the leaseholders, asking them to vote on whether we should retain the existing Management Agent, or whether we should seek to appoint a new one.
The result was that the overwhelming majority of leaseholders voted to appoint a new Agent.
We were very much in favour of appointing a local company who utilised local trades people to carry out the work at the development. With this in mind we discovered Paramount Estate Management which is headed up by Shaun Smith.
We invited Shaun to come along to one of our directors meetings where he outlined his experience in managing developments like ours. We also took up references from leaseholders at other developments that Shaun was managing…it’s fair to say that they were glowing ones !
So with all of the directors in agreement, having carried out our due diligence, we decided to appoint Paramount Estate Management (PEM) as our new Management Agent as from the 1st of January this year.
We are now 6 months into our contract with PEM and we think it’s fair to say that the feedback has been really, really positive. We feel a lot more involved in what goes on at the development and feel like we have much more of a say; we also feel very much in control of the budget !
Shaun has been extremely proactive in his approach and has come to the table with some great ideas and ways to improve the development and to make it more homely.
Looking back and with that wonderful thing called hindsight, we probably speak for a lot of the leaseholders in saying that we only wish we had taken the decision years ago to appoint PEM !
We feel very fortunate to have found a local company and at having made the decision to step away from the national company that we were using. It’s only since we’ve made the break from them, that it’s come to light how they were using contractors who were not local at all. We had painters travelling from afar a field as Leicester who were only doing four hours work a day and also being paid for their travelling time, to electricians from Bangor !
So to conclude, if you’re unhappy with the service or rather lack of service that you’re receiving from your current Management Agent, we would highly recommend PEM.
You can contact Paramount Estate Management on 07960 606066 or alternatively by email at:- email@example.com