Property Management fees

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Property Management fees

    Hello. I'm an overseas landlord and own one of four flats in a building, which I rent out; until recently one of the other owner occupiers looked after the management of the building, however he has now sold up and moved out. The new owner does not want to take on the responsibility of managing the property and has requested that we hire a property manager. I've not had dealings with property management before and from what I'm seeing the monthly cost ranges from between 8% - 20% of rental income in the London area.
    Is it usually an estate agent who fulfils this role and are there any red flags / hidden costs I should look out for? Any tips or recommendations on how to procure a decent property manager would be most gratefully received.
    Many thanks in advance!

    #2
    I think you might be confusing two different kinds of property manager.

    People managing rental property for landlords charge the kinds of rates you mention, but they aren't the kind of property manager for a building full of leased flats.
    I'm sure some companies do both, but the fee structure would be different.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      My thoughts as well. Management charge for a block of flats is unrelated to the rental income of those flats.

      Given the context and in the absence of other info I presume the flats are leasehold and you own a share of freehold??
      There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

      Comment


        #4
        Thank you both for your replies.
        Yes, the flats are leasehold with a share of freehold.

        Comment


          #5
          Originally posted by Santa Fe View Post
          Is it usually an estate agent who fulfils this role
          No. Usually a property manager that specialises in residential block management.

          Originally posted by Santa Fe View Post
          are there any red flags / hidden costs I should look out for?
          If they are acting as agent for the freeholders then presumably the law of agency applies and it would be illegal for them to receive hidden profits in the form of commission on maintenance and insurance. One to be be mindful of, nonetheless. It is common for instance for freeholders to receive insurance commission (although that is a slightly different situation).

          Originally posted by Santa Fe View Post
          Any tips or recommendations on how to procure a decent property manager would be most gratefully received.
          Find out who manages nearby comparable properties. Talk to residents from those buildings, if possible.

          There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

          Comment


            #6
            You will probably find that all the costs will increase, not just the management fee, a managing agent does not have the same interest as a leaseholder to keep costs down. You should be aware of the agent appointing contractors with which it has a connection. It is not illegal for the agent to receive commission and other benefits from managing a building, it should declare those benefits but there are loopholes whereby the benefits are received indirectly or as "favours".

            Comment


              #7
              Hello.
              I own one of four flats in a building. Until recently all maintenance issues etc. were dealt with amicably between the owners (two of us live overseas and rent out our flats). Two of the flats have been sold in the past few months and one of the new owners is suggesting we get a block management company involved; the other new owner also seems keen. I've never had to deal with a block manager and am unsure of the services they offer, the pro's and con's and the costs involved. Could anyone give advice on this?
              The four flats are all leasehold with share of freehold; if for example the third owner decides block management would be good, am I obliged to go with the majority or can I opt out?
              Thank you in advance for any advice!

              Comment


                #8
                Many thanks for your responses.

                Comment


                  #9
                  There are a number of companies who specialise in this, it frees up the time of the leaseholders, especially if the burden of responsibility to organise and get quotes/ trades in is left to one individual. The disadvantage is that they will charge an management fee for running the block 24/7 x 365. You should consider it if you are the one who is currently dealing with issues. A normal estate agent would not be able to handle this as they would only be looking after the T they have a contract with, how are external works maintenance etc dealt with?

                  Comment


                    #10
                    Ash72, thank you for your reply. One of the freeholders who recently sold up and moved on took on the role of overseeing quotes and dealing with tradesmen. Do you happen to know if I can opt out of Block Management if the other three freeholders decide to go ahead with it - there's nothing in our leases that states we have to have block management?

                    Comment


                      #11
                      Originally posted by Santa Fe View Post
                      Do you happen to know if I can opt out of Block Management if the other three freeholders decide to go ahead with it - there's nothing in our leases that states we have to have block management?
                      The short answer is no.

                      It sounds like you may still be confused about the role of the type of block management company that is being proposed.
                      They will not be managing your flat for you - who rents your flat, and arranging any work that needs to be carried out on your flat, will still be entirely your responsibility to arrange.

                      What the management company will be meant to do is ensure that all of the freeholder's responsibilities are carried out (e.g. any communal areas are cleaned and maintained, the building is kept in a proper state of repair, service charge contributions are collected from all leaseholders, accounts are kept properly, etc.).

                      The leases don't have to say that you must have a block management agent. If the leases contain anything that allows the freeholder to employ a managing agent if they wish to, and allows the cost of this to be recovered via the service charges, you will be required to contribute to the cost if a managing agent is employed.
                      It sounds like the property may have a 'right to manage' company, or may be owned by the leaseholders as some sort of 'share of freehold' company. If this is the case you may be able to object to a managing agent being employed - but unless you, or another leaseholder, is prepared to take on all of the responsibilities of managing the block that wouldn't benefit you in the long run.

                      Comment


                        #12
                        Originally posted by Santa Fe View Post
                        Do you happen to know if I can opt out of Block Management if the other three freeholders decide to go ahead with it?
                        The answer depends on how the joint freeholders have agreed to make decisions, if you have agreed as normal that the majority decision will prevail, you would be required to accept the decision. If you have agreed that decisions must be unanimous, you would not be required to accept the decision but that would make decision making extremely difficult. You have an even number and you should decide how you deternine split decisions, usually one person acts as chairperson and has the casting vote,

                        I am assuming that the freehold interest is not owned by a Company, which would need to comply with its Arttcles of Association..

                        Comment


                          #13
                          Estate agents, acting for property landlord who let their flat , may charge letting management fee between 8% and 20% of the rental income.

                          A property manager ( Managing agent ) which collects the annual service charge from flat owners(leaseholders) and uses the money for maintenance of the building + Buildings insurance may charge a management fee around £200-£400 p.a from each flat owner. If the building is provided with services such as live-in manager at retirement home, or porters etc, the management fee may be several ££££s .

                          A building with only 4 flats is difficult to attract a managing agent who usually want large blocks of flats to manage. But some smaller local estate agent may be willing but you have to make enquiries with some local letting agents to find one.

                          Comment


                            #14
                            Thank you all for your responses, they are much appreciated.

                            Comment

                            Latest Activity

                            Collapse

                            Working...
                            X