Residents taking over management of apartment building - good or bad idea?

bookadict

Good Evening,

I live in an apartment building that contains 12 apartments and we currently pay just over a £1,000 yearly management fee to Remus, we previously had Solitaire - who did nothing at all.

There is one resident who strongly wants to kick the management company out and for the residents to manage the property and considered buying the lease. Thankfully the latter never happened as the bank laughed at their idea. :rotfl:

We had a residents meeting last week and this indivdual wants to kick out Remus when they are ready to hand over control to us. Now I've got my concerns, especially as some of the residents don;t fully understand what a management company does and the potential for it to go wrong.

Does anyone have an experience of runnign their own management company? And if so, have you acheived any savings etvc?

Thanks.

WhiteHorse

Most outside management companies are a dead loss. If you can manage things yourself, it can be very worthwhile.

Setting up your own company would mean a lot of work however. You really do need people who know what they are doing. You would have to decide on the structure, who and how many shareholders etc.

Apart from the danger of messing up financially, the greatest danger is personalities. Lots of people fancy the idea of being company directors and sitting on a board. Few have the ability to separate themselves and their likes and dislikes from cold business decisions.

You have to be really sure that not only are these people capable, but that the whole thing won't degenerate into an almighty faction ridden squabble.

G_M

The advantages are a) you save money: no company taking admin fees/profits in return for managing and b) you have more control: deciding when work needs foing (eg garden clean-up, re-roofing etc.

the disadvantages are a) extra work that someone in the block has to take on b) chasing flat-owners who don't pay their service charge share can be difficult c) disageements about what needs doing

At the end of the day, if you have a good, cooperative, level-headed group of flat-owners, it's a good idea. If you have lazy, uncooperative, selfish, hard-up, or absentee landlord flat-owners, then beware.

bookadict

Thanks for your response Whitehorse.

You've hit one of my biggest concerns on the head! There are four people who can see themselves as Directors and see themselves earning a quick buck from it by doing hte cleaning. And have such grand ideas on what to do with the lighting etc, that it would costs £££'s.Plus I really don't fancy knocking on peoples doors asking for money.

Also there are a few who seem to think that the management agent covers problems in the apartments! Bless them.

We have a nominated spokesperson but noone has nominated them to my knowledge. Plus when we do have meetings they do tend to meander off course BIG TIME!!

Ho hum, we shal have to see what happens.

nickyc_2

Ask me again in 6 months as currently buying the head lease of some flats & so will be responsible for the service management side of things.

If you/the other owners want to take over the management you'd had to follow the right to manage process. Elements of it are complicated (we were looking at this process before the head lease was put up for sale) but you can get a company to help you but they will charge for it.

As mentioned you'd have to set up a company which has costs associated with it and you get to collect the ground rent

You'd need to remember that you take on responsibilities laid down in the leases - for example we have to paint the outside of our buildings every 4 years and the internal shared areas every 6 years. Make sure you understand your obligations.

As for making money, the most common way is on insurance premiums.

The Leasehold Advisory Service is an excellent source of information if you decide to pursue the right to manage.
http://www.lease-advice.org/

bookadict

nickyc wrote: »

Ask me again in 6 months as currently buying the head lease of some flats & so will be responsible for the service management side of things.

If you/the other owners want to take over the management you'd had to follow the right to manage process. Elements of it are complicated (we were looking at this process before the head lease was put up for sale) but you can get a company to help you but they will charge for it.

As mentioned you'd have to set up a company which has costs associated with it and you get to collect the ground rent

You'd need to remember that you take on responsibilities laid down in the leases - for example we have to paint the outside of our buildings every 4 years and the internal shared areas every 6 years. Make sure you understand your obligations.

As for making money, the most common way is on insurance premiums.

The Leasehold Advisory Service is an excellent source of information if you decide to pursue the right to manage.
http://www.lease-advice.org/

Nickyc, thanks for this.

I honestly don't think that the person who wants to take it over, has fully thought through all of these. As when I raised some of the points raised here, I got brushed off.

They are aware of the lease advice organisation and have been quoting this at meetings, tryiing to confuse some people.

Thanks again for everyones help.

Fire_Fox

bookadict wrote: »

Good Evening,

I live in an apartment building that contains 12 apartments and we currently pay just over a £1,000 yearly management fee to Remus, we previously had Solitaire - who did nothing at all.

There is one resident who strongly wants to kick the management company out and for the residents to manage the property and considered buying the lease. Thankfully the latter never happened as the bank laughed at their idea. :rotfl:

We had a residents meeting last week and this indivdual wants to kick out Remus when they are ready to hand over control to us. Now I've got my concerns, especially as some of the residents don;t fully understand what a management company does and the potential for it to go wrong.

Does anyone have an experience of runnign their own management company? And if so, have you acheived any savings etvc?

Buying the freehold was a excellent idea as you would have had autonomy to appoint a management company of your own choosing, and would have been easier and cheaper to extend your long leases. Running your own management company is a crazy idea - it's an enormous amount of work as there is so much legislation to comply with and getting people to pay up is a nightmare.

My parents block has purchased the freehold and partially self manages, my father sat on the board and a friend of the family still does. The conversion from a listed mill is twelve years old and absolutely immaculate, they pay less than the going rate for the area and residents still constantly dispute increased charges. Note that the freeholder/ management company is obliged to meet their repairing obligations regardless of whether everyone contributes; my parents block has a completely unnecessary interest bearing loan as a result of PITA leaseholders.

The LEASE website that has already been linked to is excellent - you all need to read it thoroughly. I would suggest you ask the potential directors at the next meeting which pieces of legislation they feel are most important for an MC to comply with ... Don't allow yourself to be brushed off, politely use the broken record rechnique.

Owain_Moneysaver

Last block I lived in (16 flats in a tenement) it took nearly 10 years and about four Treasurers before every flat was paying (£25 per month by standing order).

A local cleaning co. came and did the stairs fortnightly, a local gardener came fortnightly in season (lawn mowing), and all the windows (outsides) in the block got washed as well. All that needs is the contractor appointed at the start of the year, and periodic cheques sent.

There was also a modest accumulation in the kitty for periodic expenses such as close repainting, sometimes 50% of the cost would come from the kitty and 50% would be divided among the flats as an additional payment.

Although we had residents or committee members doing some of the maintenance work they always did it to a quotation agreed in advance at a Meeting; usually it was an advantage as they had a personal interest in doing the work properly.

Hardly anyone ever came to Meetings quarterly, in the local community hall, but doing minutes circulated to every flat and posted to non-resident owners is a chore for the meetings sec'y.

Generally worked very well though and kept the building well maintained - probably added several £k to the value of each flat in a difficult market, so worth doing.

Local surveyors were quoting £10 per flat per month as factor fees.

Richard_Webster

This thread hasn't really distinguished between the situations where:

a) the lessees of the flats own the management company that also owns the freehold where they might have a managing agent doing the work for them or could do it themselves; or

b) freeholder has appointed a managing agent (often called a management company - such as Solitaire or Remus) and the lessees would like to obtain the Right to Manage collectively because a majority don't like the way it is being managed by the agents at the moment.

The issues involved are not the same but there is a lot of confusion as to management companies and managing agents.

martinman3

WhiteHorse wrote: »

Lots of people fancy the idea of being company directors and sitting on a board. Few have the ability to separate themselves and their likes and dislikes from cold business decisions.

So true.

Fire_Fox wrote: »

Note that the freeholder/ management company is obliged to meet their repairing obligations regardless of whether everyone contributes; my parents block has a completely unnecessary interest bearing loan as a result of PITA leaseholders.

This is an extremely important point. If anyone is considering managing their property check the lease to see if a reserve or sinking fund is allowed. Without one, if there is major work required at short notice and just one leaseholder is unable to pay their contribution the work must still go ahead. Adding a small amount to the annual service charge to cover yourself is a small price to pay.