With blocks of flats where owners are either leaseholders or have a share of the freehold, then another individual – or, more commonly, a company – manages all the properties within that block. That involves things like looking after the communal areas, collecting ground rent and service charges, preparing annual accounts and arranging for maintenance to be carried out.
With increasing numbers of Buy to Let portfolio landlords looking to diversify and earn additional income by using their knowledge and expertise to manage other properties, here are the headline points on what you need to know about the legislation covering block management and your obligations as manager:
1. Knowing all the lease terms
Individual flats, even within the same block can have different lease terms. As manager, you need to be aware of exactly what each owner is permitted to do and what the block manager is obliged to do for that owner.
2. Enforcing the terms of the lease
If leaseholders within the block breach the terms of their covenant – for example, by making unauthorised alterations or sub-letting via short-stay websites like Airbnb, which can be a restriction – you as manager must deal with the issue.
3. Fire safety
You are responsible for having a risk assessment carried out and for ensuring there are sufficient fire safety measures in the communal areas – fire alarms, fire doors, extinguishers and escape routes, etc. The best way to do this is have a professional fire safety representative visit to carry out the assessment and advise you of what is required.
4. Other health & safety requirements
You must ensure the site is always compliant with health and safety law and that only approved contractors carry out maintenance.
The block manager is responsible for: collecting service charges and ground rent; ensuring there are always sufficient funds in the management account; preparing budgets; allocating resources and making sure accounts are prepared correctly for the shareholders of the block. This is usually achieved by appointing an experienced accountant.
6. Routine inspections
To ensure the property remains in good condition and nobody is obviously violating any terms of their lease, you must arrange for regular inspections of the communal areas, inside and out.
The individual owners’ service charge includes buildings insurance. You will need to inform the insurer how many flats are owner-occupied, how many are rented out and what type of tenants are living there, to ensure the cover is appropriate. We can offer specialist insurance for landlords, if you have any questions do speak to one of our property insurance advisers.
8. Keeping detailed records
It is your responsibility to keep clear, detailed records of all works, payments, inspections, etc.
9. Section 20 Notice for works to the building
This is a complex issue but, essentially, if certain works need to be carried out to the building and the cost to an individual leaseholder will exceed £250, the management company is required to follow a three-stage consultation procedure. If this is not done properly, you as the management company could be liable for any cost over and above £250 per leaseholder.
10. Keeping up to date with legal changes
You must ensure you know about and understand all new legislation and amendments to existing laws that will affect the block and your management of it.