Self-Managing Your Block of Flats vs. Appointing a Managing Agent: Exploring the Pros and Cons


20/11/2023

Author : Mary-Anne Bowring


Software and self-management alternatives for blocks of flats explained: Pros and Cons considered

When managing a block of flats, leasehold property owners have two primary options: self-management or appointing a managing agent. Each approach comes with its own set of advantages and disadvantages. In this article, we will explore the pros and cons of self-managing your block of flats versus hiring a managing agent.

Pros and Cons weighed up
1. Cost Savings: small block management support solutions from 630 per annum through ServiceChargeSorted.co.uk

Self-managing your block of flats eliminates the expense of hiring a managing agent. This can be beneficial for smaller communities with limited budgets. Ultimately, most managing agents charge a minimum fee; this may cause a reasonable price per apartment when there are twenty apartments in the building, but when divided between three or five apartments. From the managing agents perspective, the legal risks are high, professional Indemnity insurance is required and systems and procedures to keep on track of multiple blocks are expensive.

Direct Control: You establish the budget, make decisions, and maintain control with our small block management support solutions.

When self-managing a block of flats, the Board (usually a group of elected leaseholders or property owners), gets full control over decision-making. This means that as representatives of all the apartment owners, they can decide what to budget, which contractors or service providers to use and to set the agenda for major works and external decorations. This level of control in setting the strategy and service charge can be achieved both if your block has bought the freehold and has a freehold management company, or is a right to manage a company, or if the leases were constituted with a residents management company. However, for small blocks of flats that cannot afford a managing agent, there is finally a solution that puts leaseholders in control of the strategy and decision-making for their block, without having to pay the minimum fee levels of a managing agent. That solution is to self-manage with support through servicechargesorted.co.uk

3. Community Engagement: Self-management encourages stronger community engagement among residents. Owners can interact directly with tenants, fostering a sense of community and addressing concerns more promptly. Blocks that self-manage are, on average, more likely to elicit the support of other leasehold owners than blocks that appoint a managing agent.

Transparency: online software that makes it easy for self-managing blocks to disclose supporting invoices and documentation with all owners.

Managing a block of flats yourself means you need to be prepared to deliver transparency in financial matters to all leaseholders. This means a place where invoices and financial records can be inspected. You also have to be ready to deal with GDPR requests and to produce all emails, letters, and documents held concerning an individual. In addition, if a leaseholder serves a Section 22 notice, then you have to bundle bank statements, invoices, and other dockets used to compile the set of accounts against which the Section 22 notice is served and to provide these to the leaseholder who served the notice. ServiceChargesSorted.co.uk makes all this easy as it is effectively the online property manager and works a little like online banking, so a member of the Board of directors in charge goes online, uploads the invoice they want to be paid, chooses another board member, who is then sent an invitation to log on and provide authorisation for ServiceChargesSorted.co.uk to pay the invoice. The team at ServiceChargesSorted.co.uk then pays the invoice from monies collected from the service charge payers.

Time Commitment: How long does it take to run a self-managed apartment block?

Cons:

Self-managing a block of flats requires significant time and effort. Property owners, the leaseholders themselves, must handle administrative tasks, maintenance issues, financial management, and dealing with tenant-related matters. This can be overwhelming, especially for owners with busy schedules or multiple properties. ServiceChargesSorted.co.uk estimates even for a small block with a few issues that the time commitment is between 40 to 80 hours per annum.

Lack of expertise: What legal requirements must a tiny apartment complex understand to effectively self-manage?

Managing a block of flats involves various legal and technical aspects. Without professional expertise, owners may struggle to navigate complex legislation, handle disputes, or oversee maintenance projects effectively. It contained much of leasehold service charge management legislation in the landlord and tenant acts, specifically the Landlord and Tenant Act 1985 and 1987, the Common hold & Leasehold Reform Act (Leasehold Reform) Act 2002. More recently, the Building Safety Act 2022 and has added too much of the health and safety aspects contained in the 2005 Fire Order the Fire Safety Act 2021. For freehold management companies, resident management companies, and right-to-manage companies there is also company legislation as various Companies Acts to get to grips with.

3. Limited Resources: Self-managing may limit access to specialised resources, such as property managers who have qualifications issued by the Royal Institution of Chartered Surveyors (RICS) or the Institute of Residential Property Management (IRPM). Most professional managing agents will also have the resources to undertake proper contractor accreditation processes and a list of trusted contractors, as well as in-house legal teams. Engaging with professionals can be more challenging, potentially leading to delays or suboptimal solutions. At ServiceChargesSorted.co.uk our parent company The Ringley Group has all the above: Ringley Law is our Solicitor's practice, and we are independently ISO45001 accredited which is 3rd party vetting of our health and safety procedures and contractor procurement processes.

The appointment of a managing agent

Pros:
1. Expertise and Experience
: Managing agents possess the knowledge, expertise, and experience to handle various property management tasks efficiently. Usually, they belong to a professional body giving them the inside track to stay updated with current regulations and industry best practices, ensuring legal compliance and smooth operations.
2. Time Savings: By delegating responsibilities to a managing agent, property owners can reclaim their time for other personal or professional pursuits. The agent takes care of routine tasks, maintenance coordination, and tenant management, reducing the burden on the owner. Or I will share the weight of a dispute as you will have professionals around you, and, if you go on holiday at least you know that there are professionals on duty to keep things running.
3. Access to Networks: A managing agent often has established networks with trusted contractors, suppliers, and legal professionals. This facilitates smoother and more cost-effective maintenance and repairs. Many will also be certified in their contractor and health and safety management with staff trained to NEBOSH or IOSH and as a company may well be ISO45001 accredited too.
4. Conflict Resolution: Managing agents act as mediators in signposting leaseholders and providing best practice advice from their collective experience. Often this can stave off disputes. And, if there is a serious dispute, at least if you have a managing agent then any conflict will be handled impartially and professionally. You can distance yourself from it and not have to feel that you have to avoid neighbors in quite the same way. There are plenty of stories and experiences where a professional managing agent in situations of conflict resolution can help maintain a harmonious living environment.


Cons:
1. Cost
: Hiring a managing agent involves additional expense vis a vie if the volunteer residents' board has no software and does everything for free. A managing agent's fees vary depending on the services provided, the size of the property, and the location. For smaller blocks of flats, these expenses might be perceived as an unnecessary financial burden, especially, if the managing agent has a minimum fee of say 2,500 and this has to be split between just 3 or 5 flats.
2. Reduced Control: Property owners relinquish control over day-to-day operations and decision-making to the managing agent. While this can ease the burden, it may also result in decisions that do not align with the owner's preferences.

But, there is no need to stress, now there is another way, a new way. ServiceChargesSorted.co.uk is the expertise of a managing agent packaged into the essentials, just financial and legal administration to take the strain out of self-managing your block of flats. It is the best of both worlds: you remain in charge in the role of the property manager, and you or the board decide what to spend as you set the budget on the ServiceChargesSorted.co.uk portal, we demand it, do the banking and bank reconciliations, send out the demands, polite reminders, and final notices, instruct debt chase, and pay the bills that you tell us to pay.

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