Terms like ‘Managing Agent’ and ‘Leasehold’ are regularly bandied about, but what do they actually mean?
To start by explaining what Leasehold is, it applies to virtually all flats across England and Wales, as well as some houses. If you have one, technically you don’t own the property involved, but as a Leaseholder or Lessee you have purchased the exclusive right to remain in your home for a set period of time, starting from the date of the granting of the original lease.
A lease is a specific kind of property contract between the Landlord and Leaseholder, setting out the rights and obligations which apply to both parties. It goes without saying that you need to read your lease carefully before signing to ensure you familiarise yourself and are happy with what you are purchasing and obtain legal advice if anything seems unclear.
A lease sets out:
- The services the Landlord has to provide
- The definition of the Flat and what is included in this
- What the Leaseholder has exclusive use of, and what is shared between the other Leaseholders
- What the Leaseholder has to pay i.e. Ground Rent and Service Charge
- What Buildings Insurance should cover
- The length of the lease
- Rules for the building i.e. whether you can keep pets or the terms for subletting the flat
With a block of flats, the Landlord (also referred to as the Freeholder) would be responsible for the building structure; and in addition, maintaining this and the common areas within. They would be responsible for putting in place adequate buildings insurance and services like cleaning, electricity and lift services should these apply. However, as per the terms of the lease, the cost of these would be passed to the Leaseholder in the form of a Service Charge.
Service Charge
As you’re no doubt aware, this covers building maintenance plus upkeep of communal areas, insurances and administration for example year-end accounts.
The charge includes the fees charged by the Managing Agent (see below) for what they do, although this is typically only a tiny part of the whole service charge.
The role of a Managing Agent
The Lease will allow the Landlord to appoint a Managing Agent to deal with their responsibilities at the building on their behalf. Although the Managing Agent would be the main point of contact for the Leaseholders, the Landlord would always have the ultimate legal responsibility for the running of the building but they have just chosen to appoint an Agent to do this on their behalf.
In addition to the Landlord being able to appoint a Managing Agent, this can also be done by a Right to Manage Company and a Management Company.
The duties the client has asked the Managing Agent to carry out are covered in the Management Agreement. As leaseholder, you’re entitled to ask to see a basic summary of what the Managing Agent is responsible for doing.
Duties a managing agent could be responsible for
These vary from one building to another, but might include the following:
Financial
This would include preparing a yearly service charge budget which would then be issued to all Leaseholders in the form of a Service Charge Demand. They would also be responsible for collecting this charge, as well as the Ground Rent charge, from all Leaseholders.
Service Charge Accounts would be arranged at the end of each Financial Year and distributed to all Leaseholders.
Dependent on the terms of the lease, the Managing Agent would also organise a Reserve Fund plan for any future major works and maintenance at the building.
Leaseholder Relationships
The agent will deal with general enquiries from leaseholders and should a leaseholder look to sell their flat, its likely their solicitor will require completion of a Management Pack to provide all of the necessary information about the building to the incoming owner.
Lease Compliance
The agent ensures compliance with the terms of the lease including issues such as subletting, routine maintenance requirements and adherence to the terms set out in the lease.
Health and Safety
Health and safety checks, fire risk assessments, asbestos checks and the like all fall within the remit of the managing agent.
Repairs and Maintenance
The agent administers any insurance claims and looks after repairs and maintenance on a day-to-day level and would be expected to do so promptly and efficiently. This work would also involve site inspection, contract preparation and overseeing.
It is worth noting, that this industry is not regulated by law, and as such you need to choose your Managing Agent carefully and ask for recommendations while thoroughly checking qualifications. Equally, it’s a good idea to have a list of the services you want an agent to provide drawn up before you make an appointment.
How we can help
Financial Director at Oakfield Estate Agents, Samantha Hensher says: “We provide an outstanding Management service for apartment blocks across Eastbourne, Hastings, Bexhill and Tunbridge Wells. Our blocks range in size from two to 70 units, and we fully appreciate that clients want a professional, experienced and highly reliable provider of these services.”
We work with everyone from Company Directors to Landlords (Freeholders), and we could help you too. Get in touch today for an informal chat about our Block Management services – we run this team from our Head Office in St Leonards, and will be delighted to talk to you.