Managing Agents: Fees and Services
The only official body concerned with leasehold block management and representing managing agents is the Association of Residential Managing Agents (ARMA). From those agents who look after a few blocks to national companies who manage many, in the words of ARMA “the role of a managing agent is a complex one and requires a professional approach. To carry out the role requires knowledge of landlord and tenant law, building construction, health and safety regulations, basic accounting and more”
So their aim is to promote high standards of leasehold management and professionalism through advice, training and guidance. They don’t however represent individual property managers.
Many freeholders and RMC’s will use managing agents due to the complexities of self-managing anything larger than half a dozen or so flats. The role of the managing agent is wide-ranging and depends on the type and size of the property but in the main it will send out service charge demands, manage the payments, obtain buildings insurance, and collect ground rent. The management agreement is the contract between the managing agent and the leaseholders and all managing agents make their money from the fees they charge for their services. These are paid for by the leaseholders and any management fee charged under a long residential lease is subject to s19 of the Landlord and Tenant Act 1985 (limitation of service charges: reasonableness). The RICS Service Charge Residential Management Code (3rd edition effective from 1st June 2016) states the basis of fee charging.
They can offer some (or all) of the services listed below:
Common Area Maintenance, Repairs & Health & Safety
- Preparing programmes of planned maintenance and redecorations;
- Establishing required repairs and obtaining quotations for the work;
- Appointing/supervise contractors;
- Inspecting the completed repairs,
- Preparing specifications for landscape maintenance, cleaning etc;
- Placing maintenance/service contracts for equipment (lifts, fire equipment, automatic gates, water pumps etc).
- Advising on the use of specialist professionals and contractors for plant and machinery.
- Administration of Direct Debit payments;
- Setting the service charge budget;
- Collection of service charges;
- Using external solicitors/debt collectors when their in-house service charge recovery process is exhausted;
- Preparation and production of the year-end service charge accounts, (including dealing with any year-end surplus or deficits);
- Maintaining estate ‘trust status’ bank accounts;
- Paying suppliers and contractors;
- Maintaining financial records;
- Dealing with independent accountants concerning audits and reports on factual findings;
- Providing a periodic budget report of income/expenditure and cash flow (quarterly reports);
- Adhering to the requirements of s20 major works (and qualifying long term agreements).
Negotiating and arranging buildings insurance and Directors and Officers Liability Insurance.
- Instructing solicitors in relation to lease breaches;
- Representing the landlord at County Court level, arbitration and First Tier Property Tribunals;
- Providing Company Secretary work (note that not all managing agents will be willing to offer this service);
Visits & Communication
- Estate inspections on a regular cycle;
- Meetings with residents upon request during office hours;
- Meetings with residents’ associations/management co. directors as necessary during office hours;
- Meetings with contractors, developers and other agencies on site as necessary;
- Preparing and distribute notices for the AGM/EGMs and arrange attendance at such meetings;
- Ensuring compliance with the terms of leases and policy agreed with the Board and, where necessary, subject to landlord authorisation;
- Regulating the use of the flats with regard to sub-letting;
- Enforcing the lessees rights to quiet enjoyment (peaceable occupation) in the event of disturbance by other residents.
Note: when the word ‘tenant’ is used, it refers to leaseholders, not renting tenants.
TWO LISTS OF SERVICES
Ideally the agent should agree two lists of services/duties with the client: the first being the standard management fee, which is normally stated as an annual fee for the development in total, with increases fixed against the RPI (Retail Price Index). This method is considered preferable so that tenants can budget for their annual expenditure instead of it being set per unit. However, where the lease specifies a different form of charging, this is what will be used by the managing agents.
The second should be for additional fees such as the handling of major works and qualifying long-term agreements under s20 of the Landlord and Tenant Act 1985 (limitation of service charges: consultation requirements) which requires the sending of consultation documents. It is important to note that only the fees for this and those of the standard fee for the provision of services will fall within the definition of management fees used by the First Tier Property Tribunal.