Managing Your Property Management Company
Head of Property at Peter Bowles + Co. Solicitors, Catherine Heyes looks at the important issue of property management companies, their role and why homeowners should take an interest in the running of the property’s management company.
The past 18 months have brought unprecedented pressures, and the need to adapt to a new way of living, working and socialising. It has been a difficult time for many, but it has also seen communities come together, with many reporting that it has been an opportunity to get to know neighbours and foster a sense of community spirit.
For those living in an apartment or a housing development which offers the use of amenity areas with others, such community engagement will already have existed to some extent, often through common membership of a management company for the development.
These are companies set up to deal with ongoing maintenance of commonly used spaces once the developer has completed the sale of all properties. The management company’s shareholders are the development’s homeowners, and each has a legal obligation in the deeds of their property to pay a share of any costs incurred by the management company in carrying out its responsibilities. This payment is typically referred to as a service charge and the amount payable will vary between developments and is dictated by the extent of the common spaces that the management company is responsible for. Grass cutting and landscaping for a single shared open space will cost much less than the myriad demands made on a management company for an apartment building, with common hallways, stairs, and possibly lifts, which need ongoing care and attention.
It is important that arrangements are in place to ensure that the management company carries out its obligations effectively, as well as to ensure that it complies with filing requirements at Companies House. Occasionally the shareholders may be happy to deal with these matters themselves, but in most cases the company will engage managing agents to act on its behalf. These agents will arrange for necessary work to be carried out, for Companies House records to be up to date, and will organise shareholder meetings. The fee they charge for doing this is a management company expense covered by the service charges collected.
Even where an agent has been appointed, it is sensible for homeowners to ensure that they take an interest in the running of the management company. Annual general meetings are an opportunity for shareholders to have their say, and to build relationships with neighbours. Poorly attended shareholder meetings can be cause for concern and run the risk of significant problems going unnoticed, such as persistent non-payment of service charges by homeowners, or essential maintenance not being promptly dealt with. As well as the potential impact of poor upkeep and maintenance on the homeowner’s enjoyment of their property, there may be consequences when trying to sell. A solicitor acting for a prospective purchaser will ask for minutes of meetings, service charge budgets and check Companies Office filings, and it will be apparent where the company is not being run effectively. This may result in a purchaser opting not to proceed.
If you are considering buying or selling a property in a development with a management company, you can get in touch with our specialist team at Peter Bowles & Co. Solicitors on 028 9751 2722 or e-mail email@example.com.
For further information, please see www.bowles-law.com
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