Why should we appoint a managing agent?
Answer: Let’s start by asking you some questions:
Do you know how to ask for service charges in a way that makes their collection lawful?
Do you know when and how to implement the Section 20 Consultation procedure in connection with service charge expenditure?
Do you understand what your lease permits as service chargeable and how it requires you account for service charges?
These and many other similar issues are part of daily life for managing agents. Not being aware of them could lead to service charges being uncollectable or expenditure having to be returned to leaseholders.
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Should we have a reserve fund?
We believe that reserve funds are essential for the smooth running of blocks of flats. They enable major works to be funded at the appropriate time without the need for large, one off, payments from leaseholders.
Funds being collected over a number of years allow leaseholders to pay for wear and tear through the period of their ownership. Otherwise the burden falls entirely on leaseholders current at the time of the work, and they may only just have purchased.
Bear in mind that not all leases allow for the collection of a reserve fund.
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We are unhappy with our freeholder. What can we do?
It may be appropriate to apply to The Leasehold Valuation Tribunal with your complaint(s) against the Freeholder.
You can also take the management of the property into your own hands by claiming the Right to Manage. This will give you, through a Right to Manage Company, all of the powers under the lease except forfeiture which remains with the Freeholder.
You could also consider exercising your right to purchase the freehold of the property.
Both the Right to Manage and the right to purchase require 50% participation of leaseholders and expert advice.
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What are my service charges based on?
Service charges collected in advance should be based on a considered budget for the year. The budget can be prepared with reference to previous year’s expenditure for annual items, estimates or quotations for work specific to the year, and a reserve fund collection if appropriate.
You will pay the proportion of the total service charge stated in your lease.
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What is ground rent?
Ground rent has nothing to do with the maintenance of the building. It is an income to the freeholder and the amount, sometimes with periodic increases, is stated in your lease.
If you do not pay your ground rent you could potentially lose your property (forfeiture).
When leaseholders buy the freehold of their block they often dispense with ground rent.
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My mortgage lender wants me to take out building insurance. Why?
Blocks of flats are insured as a whole and not as individual flats. You are entitled to copies of the policy and schedule to confirm this. Send copies to your mortgage lender to show that the building is insured.
Leaseholders who have been paying a building insurance premium to their mortgage lenders, even for many years, can reclaim their money by demonstrating that the property was already insured for the relevant period.
Remember that the building insurance will not cover the contents of your flat. You will need to make your own arrangements for this.
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If you take over our management would you change our contractors?
If you were unhappy with them, yes.
If you were happy with them, no.
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