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Property Management Contracts

By: Lorna Elliott LLB (hons), Barrister - Updated: 21 Apr 2019 |
 
Lease Property Managing Agents Contract

When you buy a flat, maisonette or other leasehold property you are in essence buying the sole right to occupy that property for a specified period of time. After the expiry of this period the property will revert to the landlord, known as the freeholder. The document that governs the relationship between you and the freeholder is the lease. It is very important that you understand the requirements of the lease as well as making investigations into the company that manages the affairs of the freeholder. Early recognition of potential problems can avoid considerable headaches later on.

It is obviously important to check the length of time left on the lease. If the remaining term falls below a certain threshold, as well as having a considerable impact on value, it can be difficult to secure a mortgage. However it is possible to extend your lease but there is an obvious additional cost associated with this.

Ongoing Costs

Before exchanging contracts it is very important that you or your solicitor has read and understood the lease. This will enable you to make an informed decision about the potential purchase. There are often charges and fees payable in connection with the lease such as a service charge, ground rent or a managing agent fee.

Often the managing agent is not the same company or individual as the landlord. Ground rent may be described as a ‘peppercorn’ or a small amount of money, e.g. £10 per annum. It is vital that you take into account these fees before purchasing the property, and also to bear in mind that these fees can be subject to review and rate increases. If as the leaseholder you fail to pay these charges, the landlord can as a last resort repossess the property. On occasion, there are also other terms contained in the lease such as ‘no pets allowed’ or ‘no parking on the grass’.

Your Responsibilities

A standard lease will make you, the leaseholder, responsible for everything within the four walls of the property – including the floorboards, ceiling and plaster. However this does not usually include structural or external walls as the landlord is usually liable for the building’s repairs and maintenance.

Questions To Ask

Before exchanging contracts on a leasehold property, make sure you know the answers to these questions:
  • What is the cost of the service charge each year?
  • When is the amount payable due for review?
  • Do leaseholders pay money into a fund to help pay for repairs?
  • For which parts of the building are all leaseholders responsible?
  • What is included in the insurance policy for the building?
The managing agents or freeholder should be able to provide the last three years of accounts. If these accounts are not forthcoming, or are defective, it may be a sign that the building is not well run. A tip is to spend some time looking at the ‘common parts’ of the building when you view the property. Delapidated or hastily completed repairs can be signs of trouble ahead.

Make enquiries as to the residents committee and if possible speak to current or past residents to get an idea of the situation. It is not uncommon for residents committees to have major disputes with managing agents, although there are many managing agents that are highly proactive and efficient.

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Share Your Story, Join the Discussion or Seek Advice..
Hi, we live on a residential estate with a management company run by residents. There are three areas on the estate, a meadow and two woods, which our title deeds show as "open space amenity araes" but the management company has restricted access to everyone stating that the areas are out of bounds and were never meant to be open. What do we do to make the company open the areas. The majority of the estate are frankly not bothered either way but there is a small group of anti-access residents who's properties are bordering the disputed areas and most of whom are directors of the company. Sadly they out number the pro access group. We are not allowed to become directors as our views "differ from those of the existing directors". We've asked the company by what authority have they closed the areas but they just ignore us. What can we do and where do we stand legally, We've been told that the title deeds are binding and the areas should be open. We'd like a second opinion. Many thanks.
Steve - 21-Apr-19 @ 8:50 AM
sue - Your Question:
Hi I belong to a development which has a yearly maintenance contract Fee Since moving in 12 years ago the Fee has risen every year from approx. £130 to £330 a year To be honest with our rates we pay a lot off money each year Most of the residents want to come out off this. How would be the best way to do this ? Would the council adopt the development contract for a fee drawn up for all residents ? I would be interested in any feed back if others developments have succeeded in this and how it is done. Thank you

Our Response:
This is a common problem in leashold arrangements and frequently flat owners feel they are overcharged for fees that do not seem to justify the work carried out and are therefore questionable. You have a few options; to firstly dispute the charges, appoint a new management company or yourself and the other leaseholders can take over the management with the Right To Manage (RTM), please see gov.uk link here. You may have to do a bit more research regarding your options, but, in the first instance, I hope this helps.
ContractsAndAgreements - 22-Feb-16 @ 11:05 AM
Hi I belong to a development which has a yearlymaintenance contract Fee Since moving in 12 years ago the Fee has risen every year from approx. £130 to £330 a yearTo be honest with our rates we pay a lot off money each year Most of the residents want to come out off this . How would be the best way to do this ? Would the council adopt the development contract for a fee drawn up for all residents ? I would be interested in any feed back if others developments have succeeded in this and how it is done . Thank you
sue - 21-Feb-16 @ 9:07 AM
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