If you don’t have the expertise or time to manage your development then you will need to hire the services of a managing agent. There are hundreds of managing agents throughout the country, all will offer different types of services and all will offer them for differing prices. Finding the right agent for your development can be a minefield, how do you know you will be receiving what you pay for? And how do you know if an agent can be trusted?
Unfortunately managing agents are not regulated and although they have to adhere to the current legislation, unless you or your residents pick up on any wrong doing no one else is in place to check. Therefore it is really important that before you enter into an agreement with an agent you do your homework. This guide will help you to take the necessary steps to choose the correct agent and also help you to be mindful of what extra costs agents may levy against you.
In an unregulated sector you need to try and protect your development, therefore it is my advice that any agent you hire should be a member of ARMA. This ensures that your agent will be subject to annual compliance checks by ARMA and also all ARMA members must adhere to the RICS Service Charge Residential Management Code as well as belong to an independent ombudsman scheme. For a full list requirements ARMA sets their members I suggest you visit their website.
Other ways to obtain decent managing agents are via recommendations, talk to people you know that live on private developments, go and visit a well maintained development you live near. It’s really important that you do your research so you can be sure that the agent you hire will do a good job. Finding suitable agents could be classed as the easy part! Once you have your shortlist it’s time to begin the negotiations for the management agreement. Always remember that managing agents will want to make money out of you (they are running a business) so they may offer you services that you don’t need or you could possibly do yourself. It is really important that you know exactly what you require of your agent, put together a specification so you can be sure like for like quotations are received and only what you require is included. It is also necessary to understand that a management fee will in most cases only cover the day to day management and therefore additional costs can be incurred for certain services.
There are various way agents put together their agreements, the most common is a cost per unit based on the number of meetings and site visits an agent will conduct. This is actually quite strange as meetings and site visits are actually a very small part of what an agent will carry out for you. In any case work out how many meetings and visits you need. If you live at the development then you may only need 1 or 2 visits as you could carry out more regular checks. As for meetings, you may be tempted to have one a month etc but in reality you can handle most management issues over the phone, email, skype etc. I would suggest that even for large developments a meeting every two months, at most, will suffice. It is also important to understand how much (if at all) agents will charge for extra meetings and visits and ensure this included in the agreement.
Any good agreement will list exactly what is included and exactly what will cost you extra. This can be as simple as a bullet point list (in fact this is encouraged). Make sure you look at this list in great detail; you need to ensure that all aspects of day to day management will be included in the agreement. You don’t want to be incurring costs for items you believe your agent should cover in the fee. There will be certain items that are going to be additional to the management fee, if they are additional then you don’t have to use the agent to carry them out. However my advice is to use the same agent for as much as possible. This keep communication easy and also will help you to negotiate the best possible price.
You will usually find that additional costs will include company secretarial fees, accountancy costs and health & safety inspections. However in some cases there may be a few items that are additional that will surprise you. Some agents may class postage as an additional cost; this is entirely acceptable as the postage they send is on behalf of your development. However you may think this should be part of their service, negotiate this. You will also find that agents will look to charge a fee for managing your cyclical maintenance and major works. Again this is entirely acceptable as it is not day to day management, however it is important to establish exactly what they will charge (a percentage or set fee) and get this in the agreement.
Make the agreement as full proof as possible, if you think something needs to be explained get it in there. Your agent should be happy with this, as the agreement protects them just as much as it does you. Negotiate to get as many additional costs included within the fee for a set price (this can help reduce overspends and will also help set a budget) and also look to take additional services such as accountancy (which you will need) to help reduce the management fee.
It is also vital that you check the minimum term of the agreement. Any agreement you enter into which last more than a year and costs any one leaseholder more than £100 qualifies for consultation. Therefore if you enter into an agreement for £101 per unit which last for a minimum of 12 months with a 1 month termination period you need to consult with all leaseholders beforehand. This can naturally cause complications as leaseholders can nominate other agents and it will prolong getting an agreement finalised. Therefore my advice is to ensure that the minimum term plus the termination period is less than 1 year, so you can avoid consultation.
It is impossible for me to detail all the possibilities with management agreements, the above guidance looks at the subject in general terms. If you do have any specifics about an agreement you have seen then please do get in touch.
No comments:
Post a Comment