When managing residential properties you often think of two scenarios. Firstly, where a single house is let out, often on a short-term AST agreement by maybe the property owner landlord direct.
The second is a larger blocks of flats with multiple dwellings which then involve various communal areas like a staircase or external garden, over-and-beyond the issues directly relating to each tenant. Typically these are ‘sold off’ on long leasehold interests, although you can have just multiple shorter-term residents paying a rent and which has developed into a new PRS (Private Rented Sector) market.
It’s this second scenario where property management skills are truly needed, not only to wade through all the obligations and legalities but also to make sure the whole service works seamlessly amongst the many people involved. Often there is a managing agent instructed to do this, although you can of course have property owners or communal management companies taking on all or some of this role directly.
Therefore here are some pointers to help shape the right path through this often larger and communal block-management situation. Deliberately presented through our four different perspectives of looking at property management, these can help highlight both the technical details and general tips and tricks you need to effectively do this, and with as little hassle as possible:
The Actual Property Perspective
So the first five points focus on the actual property itself, and what real-life factors you need to consider:
Fortunately these should be fairly straightforward with just a communal electricity supply to manage, although watch out for any extras like water and gas, not only for any communal taps and heating but as part of shared supplies to each area.
Make sure you’re on the best contracts and rates, and see if you need to bill these separately for each dwelling based upon actual use and sub meters. Meter readings may also be regularly needed, and hopefully installation of Smart electricity meters will help long term.
And remember other modern forms of utilities like aerial systems, internet and phone lines – even if these are not your direct responsibility you may get involved in helping individual occupiers with them.
2. Car Parking
Always an issue, particularly with more cars per household then what is provided.
So whether it’s the regular spots or managing visitor spaces, make sure everyone’s clear on what’s allowed and be ready to deal with issues arising, including the use of permit systems if required.
Communal bin store areas can be a nightmare in terms of managing both regular and one-off rubbish. Even though the actual collection will probably be through the Council and paid for through residents Council Tax, the little extra clear-ups and problem-solving can soon mount up.
Here’s a separate resource with more details.
Although this hopefully boils down to straightforward measures, with it affecting people’s personal space it can be high on people’s lists of priorities.
Often the lock on the entrance doors is critical, yet making sure it can still be opened through a tradesman entrance buzzer during the day, and opened in an emergency from the inside as part of, say, fire evacuation is crucial.
But also, watch out for other measures such as CCTV, and managing issues such as data protection
Watch out as well for how space is being used by people, whether that’s the use of communal store cupboards or items left in the communal corridor like shoes and bikes, and even loft-areas of top flats.
In the majority of cases this isn’t permitted, therefore nipping this in the bud early on and dealing with it is key.
The People Involved
The next three aspects look at different people interests with the property:
6. Other legal Interests
This can be a minefield with communal residential blocks, whether it’s the main freeholder, an immediate landlord, external management company, or sub-tenants and agents.
Bottom all these out legally and see what’s in existence and what permissions (and costs) are needed for them. Know what the best lines are for both formal and informal communication, yet still not complicating things as far as possible.
7. Living Problems
With the scenario of people living together in often cramped conditions, you’re bound to get all kinds of living issues from blatant nuisances to simple misunderstandings.
It’s often over day-to-day issues such as smoking, making too much noise, or having pets.
Firstly, make sure you have a clear policy on these issues, and secondly a procedure for dealing with them effectively. Sometimes this might be a polite reminder, other times a formal letter and correspondence.
8. Professional Help
Bringing in other professionals is often needed at some point, but make sure these are all correct and that fair costs are being incurred, as residents quite rightly tend to be more analytical of these with having to personally pay for them.
With any kind of resident change there can be solicitors and managing against costs triggered, or for larger jobs such as maintenance projects and insurance revaluations then more building surveyors and contractors.
The Triggered Payment
When you then look at what monies are involved with managing residential blocks, here is what to consider:
9. Ground Rent
These are often fixed amounts in a lease to pay up to a few hundred pounds every year, although make sure there are no nasty increases and rent reviews in future years and decades (details here of unexpected ground rent income).
A correct invoice and notice will also need serving, all in a timely manner.
10. Service Charge
A popular service charge for running the communal parts of the property which may be managed separately to the ground rent by, for example, a management company rather than the freeholder direct, and needing to be separately-managed money held by the landlord.
These will need budgeting and accounting for in the correct way, with the right paperwork issuing such as invoices, accounts, and notices. Owners also have rights to request further details of these.
11. Building Insurance
This premium is often part of a service charge, or possibly a direct recharge - whatever is agreed in the lease.
The right cover will be needed, on the correct reinstatement value for the property, and carefully disclosing any commissions and arrangements for these being arranged. Residents also may have the right to receive further details of these as well.
12. Fees and Penalties
These have a habit of cropping up here and there, particularly when there is a change happening with the resident. They may well be justified by time going into them, but make sure this is genuine and reasonable.
For whatever monies are due, make sure you keep on top of money owed. A lot of delayed payments will be down to just chasing the right person, but others will need further action and costs to recover.
Remember that not having these monies can cause you serious cash flow issues when running, say, a service charge account and having supplier bills to pay.
For shorter-term lets these need to be paid into a third-party holder, but even in other scenarios make sure these are still correctly held and communicated
Whether this is Council Tax or utility bills, these will need paying by each dwelling owner.
Although this is technically not to do with the communal areas, unless they are linked through, say, a communal water supply, remember that it may affect the affordability of each owner for other costs, and you may need to get involved in helping with things like access for meters.
Official accounting will be needed somewhere along the lines - one of the most important distinctions being very basic statutory accounts for any registered company like the landlord or management company, as opposed to a more detailed income and expenditure report for service charge purposes.
And make sure these are correctly certified by an accountant for residential properties, with correct inclusion of balance sheet liabilities, for example, and the fee for such accountants then being fairly included in the service charge.
In addition to each dwelling owner maybe needing these for mortgage and valuation purposes, the ultimate owner may also require these, often for valuing the freehold as an investment with ground-rent income coming in.
Also, long leaseholders have rights to extend their leases for a premium and even purchase the freehold of the property individually or collectively, which will all need a correct valuation for determining market value.
The Paperwork & Documentation
As you then look into the information involved with residential properties, here’s what to consider:
18. Requesting Information
Remember that leaseholders have various rights to request information, and the landlord the obligation to provide, including invoice copies.
This includes any high one-off or ongoing charges through the service charge and classic ‘section 20’ notices.
There can also be official prescribed notices and templates that need serving in a certain way.
19. Legal Documents
Ideally these are all needed for the main property interest but also each dwelling, including long leases and any ancillary documentation such as Deeds of Covenants and Licences.
Make sure these are all lined-up for any transactions that have occurred in the past, and watch out for more company-related ones like Share Certificates and notices.
20. Inventories & Schedules of Conditions
These tend to be more for shorter-term tenancies where tenants come and go and you need to record the condition each time, but they may also exist for longer lease interests.
Linked to this you also often have issues and documentation regarding alterations to each property and involving any superior landlord’s consent.
These are not only needed now for sales and lettings for each dwelling, but watch out for changes in the law for properties under MEES where properties under a certain level cannot be sold or let
22. Building Fabric
Watch out for the important documents regarding the building condition, for example as asbestos survey and plans, building regulations and approvals, and warranties and guarantees.
Also, watch out for unusual features and services, for example heating equipment, security systems, and lifts – all needing the correct certification and maintenances.
23. Utility Supply
This is more on the actual servicing and condition of the utility supplies, with classic yearly gas-safety checks for shorter-term tenancies, regular electrical (and PAT) testing, and even water risk assessments.
24. Risk Assessments
The two classic ones are a general Health & Safety and Fire Risk Assessment.
In addition to actual building works needed from these, for example a correct fire alarm system or fill-up grit bin for dealing with ice outside, make sure procedures are communicated as well through, say, a building guide and fire evacuation policy.
And make sure this accommodates all potential persons at the property, including disabled persons, visitors and even trespassers.
They’re key to providing a good service, therefore make sure not only that they are compliant and safe, but also that they’re good value and provide a good diligent service on site.
A common complaint from residents is that they’re not receiving the hands-on service they’re paying for, often with longer corporate contractors which can come across as less involved.
Good, clear, and regular communication with people is essential in managing residential properties, particularly with so many people involved.
Make sure this includes everyone, a classic two-tier system being actual unit owners who may be based off site, and then actual occupiers if let out.
Whatever system you use, make sure it works and covers all bases – whether letters, notices on site, and website updates.
Developing the Right Path to Residential Property Management
So when looking at what’s involved with managing residential properties with numerous dwellings and communal areas at stake, these above pointers will help highlight the sorts of issues you need to consider. Right from the practical property ones to the end payments and paperwork, these help cover all the main bases.
These help map out the right path you need to take, which will of course end up being different for each unique situation. Whether your property is large or small, typical long-leasehold units or shorter-term rentals, you need to determine your own path and then set-up systems to best accomplish it.
This will help you in whatever capacity you’re in, whether an owner direct trying to tackle yourself or when appointing the right managing agent, or a related interest like an agent or management company – these will help out.
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