What are the challenges and pitfalls to look out for if you want to self-manage a block of flats?


30/11/2023

Author : Mary-Anne Bowring


What are the challenges of self-managing blocks of flats?

In this article, we aim to provide insights into the challenges that owners may face when self-managing a block of flats. The actual challenges will of course vary depending on factors such as the size of the property, the level of experience and expertise among the owners, and the dynamics within the community.

Lack of Expertise:

Owners who self-manage their block of flats may not have the necessary knowledge and expertise in property management, accounting, legal matters, and maintenance. This can lead to difficulties in making informed decisions and implementing effective management practices.

Time Commitment: how much time does self-managing a small block of flats take?

Managing a block of flats requires a significant time commitment, and the volunteer directors may need to address issues when it is inconvenient to them. Owners may find it challenging to balance their personal and professional responsibilities with the demands of managing the property. This can result in delays in addressing maintenance issues, responding to tenant concerns, or carrying out necessary administrative tasks. We here at servicechargesorted.co.uk estimate it can take between 40 hours to 80 hours a year to deal with block management issues. The amount of time that routine tasks that a managing agent provides such as splitting the. service charge budget to each owner's account, sending out demands, polite reminders, final notices arranging debt chase action, banking the money, paying the bills, and preparing the service charge accounts without systems should not be underestimated.

Disagreements and Conflict: where can you find help and advice if you want to self-manage your block of flats without a managing agent?

Self-managing a block of flats often involves decision-making by a group of owners. Disagreements and conflicts may arise regarding financial matters, property maintenance, or the enforcement of rules and regulations. Resolving these, conflicts can be time-consuming and may strain relationships among owners. One of the key benefits reported by our members at ServiceChargesSorted.co.uk is that it is a comprehensive online platform designed to assist leaseholders in navigating the complexities of leasehold property ownership. Whether you are a first-time leaseholder or an experienced homeowner, our platform offers a range of resources, guidance, and support to help you understand your rights, resolve disputes, and make informed decisions regarding your leasehold property. The Leasehold Advisory Service website is also helpful for all things service charges.

Financial Management:  what financial arrangements does a small block of flats need to put in place if they want to self-manage?

Proper financial management is crucial for the smooth operation of a block of flats. Owners must collect service charges, allocate funds for maintenance and repairs, and maintain accurate financial records. Poor financial management can lead to financial strain, inadequate funding for essential repairs, and potential legal issues. Financial Management includes applying the service charge budget to each owner's account, sending out demands, polite reminders, and final notices, banking the money, paying the bills, reconciling the bank account, and preparing the service charge accounts. Not only are many of these aspects and inconvenience, but without systems, they will be error prone.

Legal and Compliance Issues:  what are the most important pieces of legislation you need to understand if you want to self-manage a block of flats?

Owners of self-managing blocks of flats must navigate complex legal and compliance requirements. This includes understanding and adhering to lease agreements, health and safety regulations, and other relevant laws. Failure to comply with these requirements can result in legal disputes, financial penalties, and reputational damage. Invalid service charge demands or missing a Section 20B Notice could cost those who are well-intentioned in wanting to manage their block thousands. There is landlord and tenant legislation, the Landlord and Tenant Act 1985 and 1987, the Commonhold & Leasehold Reform Act (Leasehold Reform) Act 2002, the Building Safety Act 2022, and the Fire Safety Act 2021, as well as company legislation in the form of various Companies Acts to get to grips with.

Maintenance and Repairs:

Owners are responsible for ensuring that the property is well-maintained and that necessary repairs are carried out promptly. However, coordinating and budgeting for maintenance and repairs can be challenging, especially in larger blocks of flats with multiple units and shared facilities.

In smaller blocks of flats, service charge disputes and repairs disputes can wreak havoc as repairs need benchmarking repairs against the lease, what is demised to whom, and resolving flat-to-flat disputes can all take its toll. Therefore, whilst self-management can offer cost-saving benefits and increased control for owners, it is essential to recognise the potential challenges and plan accordingly. Establishing clear communication channels, and fostering collaboration among owners can help mitigate these challenges and improve the overall management of the block of flats.

So the question is: do low-cost managing agents exist to help small blocks of flats?

Or put another way...

Is there an online block and property management service designed for small blocks of flats?

Alternatives to a managing agent are rare. This is because the duty of a managing agent is vast and minimum fees usually apply, often circa 2,500 per annum or as much as 5,000 per annum in London. This is disproportionally unfair for small blocks of flats. However, there is a new way; the Ringley Group, one of the UK's top 5 managing agents has put together ServiceChargeSorted.co.uk which is all the yes, there is a low-cost alternative to a managing agent for small blocks of flats ServiceChargeSorted.co.uk where in law you take the role of the property manager to set the budget (using our online tools), you decide the strategy and we carry out all the financial and legal administration so the time that you have to manage is spent on the management, not the administration. In addition, it is because we have systems and a high level of automation we can do so for only a little more than it costs to produce a set of service charge accounts.

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