Property management fees can seem like one more troublesome expense when you’ve just moved into your first home – but do you realise just what you get for your money?
As well as the cost of your mortgage each month, becoming a property owner brings with it a whole host of other responsibilities. If you own a leasehold property you will find yourself having to pay ground rent, and on most new developments, whether you are a leaseholder or a freeholder, you will also have to pay something towards the upkeep of the communal areas.
You might find it referred to as a property management fee, maintenance charge, estate fee or service charge, but the point of the payment is that it represents a way of dividing up the cost of maintaining shared amenities fairly among all the residents. In the past, home owners were often forced to work out among themselves how to maintain unadopted roads or deal with patches of green space – and it often resulted in furious arguments among neighbours, access roads full of potholes, and waist-high grass. A professional management company not only makes sure that facilities are properly maintained for everyone’s benefit, it also ensures that everyone makes a contribution.
What your charge will be, and what it will cover, depends on the facilities that are available and what has been agreed legally. If you are buying a leasehold property, then the details of the property management will be set out in your lease. If you are buying a freehold property on an estate where a maintenance contract will apply, then the details will be set out in the TP1 form that is part of the conveyancing process. This form lists any positive covenants (things you agree to do) such as contributing towards the cost of maintaining communal areas, as well as any restrictive covenants (things you agree not to do) such as keeping pigs or parking a truck in your garden.
Occasionally, home buyers have complained that they were not aware that they would have to pay a charge at all – usually when they haven’t taken the time to read all the documentation supplied during the conveyancing process. However, at Encore we know that no one likes that kind of surprise, so we provide information packs for developers to give to potential buyers setting out exactly what is included and how your payments are calculated.
If you are buying a luxury apartment, you might find that the charge covers the maintenance of high-end facilities such as a gym, swimming pool or sauna – so if the cost appears high at first glance, remember that you are effectively enjoying the benefits of a fancy health club at your own home.
Your apartment block or estate might also enjoy the benefits of a full-time porter or concierge who will receive and store your parcel and post deliveries, handle outgoing mail and let in tradespeople, as well as undertake routine cleaning and maintenance, in which case your charge will reflect the extra services and security you receive.
Buyers of freehold properties, or of leasehold houses rather than apartments, can be surprised at what they need to contribute to; but whatever your type of tenure your property management charge will be contributing to some or all of the following:
In addition, if you are a leaseholder in an apartment, the charge will normally also cover:
A good property maintenance contract will also include regular inspections of the site and a firm plan for future maintenance, including putting aside some of every resident’s contribution into a “sinking fund”. The purpose of this is to ensure that residents aren’t faced with sudden large bills – so it will take into account the need for regular major maintenance works such as repainting the external walls or window frames, as well as putting something aside for unforeseen emergencies.
At Encore, our aim is "to care for your property as though we lived there", and one of the ways we do that is by employing our own uniformed, multi-skilled caretaking staff, who you will see regularly around the estate, cutting grass, cleaning, touching up paint or checking on health and safety matters. If a more specialised job needs doing, then we take on the time-consuming responsibility of checking that all contractors have up-to-date insurance, accreditations and risk assessment, and can provide good references.
In addition to all the practical work that takes place on site, you should also bear in mind that an effective managing agent needs a complete understanding of complex landlord and tenant law, building construction and maintenance, health and safety regulations and finance to ensure that everything really runs smoothly. There’s a lot more to it than just cutting the grass…
This article first appeared in First Time Buyer magazine. If you've recently become a leaseholder and would like further advice on how to get the best out of your managing agent - or think that your current supplier isn't up to scratch please get in touch.