A practical checklist on how to choose a managing agent

Written by Richard Benson, Director of Estate Management, Kinleigh Folkard & Hayward

How to choose a managing agent?

You could start off by contacting the Association of Residential Managing Agents (ARMA) for a list of registered agents and also contact the companies listed in this directory. Select three to invite to tender for your business. The three key areas to put on your checklist are:

1. Personal service. Make sure the company has a large enough team to cope with your level of business, in terms of being able to manage your building and to give you a personal service.
   
   
2. Ensure the company has a structured accounts and reporting package to manage the service charges and your building’s accounts.
   
   
3. Ask for references from the company’s clients on both the management and accountancy side of the business.

How to check if your managing agent is registered?

Before employing a reputable and qualified managing agent to look after a building, you should check that the business is registered. This can be simply done by visiting ARMA’s website at arma.org.uk where there is a list of all members. The list of registered managing agents can also be checked at the LEASE website lease-advice.org

What can I do if I’m not happy with the way my managing agent is working?

A managing agent should keep you informed and up to date and if you are not happy with the service you are receiving, it should be reviewed. First, contact your managing agent to voice your concerns. If there is no change, contact your board of directors to voice your concerns. If there is still no change in the service, refer to the contract with the managing agent and find out the notice period for terminating the contract. Request that the Board of Directors serve notice and invite three managing agents to tender for the contract.

Once a decision has been made, try to ensure that the agent is changed at the end of a quarter or ideally, at the end of a financial year. Also ensure that you make it clear in writing for the existing agent to stop any standing orders, invoices and any other payments in advance of the hand-over date.

How do I go about purchasing the freehold of my building?

If you are a leaseholder you may have the right to buy the freehold of your property; this is referred to in the industry as enfranchisement. To find out about buying the freehold you need to speak to a legal expert, who is highly experienced in the legislation involved with the procedure as the process is different for flats and houses.

In brief, you have the right to buy the freehold of a house if you have held a long lease (21 years or more) for at least the past two years. If you own a flat, the process is more complicated: at least 75% of the building must be residential use only; the leaseholders who agree to buy the freehold of the building are leaseholders of at least half the properties in the building and as with houses and you must hold a long lease of 21 years or more.

What is the basic difference between freehold, share of freehold and leasehold?

A freehold property is one where the owner, usually of a house, has complete legal ownership of the property. The building and its grounds are their
sole responsibility.

Share of freehold occurs when a property has a number of owners and in this situation they share the rights and the ownership of the property. For example, if you live in a house which has been converted into six flats with a share of the freehold, each property will own a proportion of the freehold. As such, you have shared responsibility for the upkeep and maintenance of the property.

A leasehold property is a property held under a lease. The rights of ownership for the property have been granted by the freeholder but only for a certain number of years and you have to pay a ground rent and service charge to the freeholder. If you are buying a leasehold property it is imperative to find out how many years are remaining on the lease and the level of service charge, including any scheduled major repairs. If a property has less than approximately 60 years its value may diminish, as extending the lease is rarely guaranteed, unless you are able to meet with the requirements to force a landlord to extend your lease by 90 years, which can still be costly.

What can I expect from my managing agent?

All registered ARMA member agents must abide by legal codes of conduct; the Codes of Management Practice are produced by the ARHM and the RICS. A list can be found at lease-advice.org.uk

From the outset of appointing a managing agent, clear objectives and expectations should be set by the residents; a contract will clarify the managing agent’s responsibilities.

The agent will provide a personalised, tailored service, which will include:

• Ensuring that the building conforms to any necessary legislation;
  
  
• Providing a value for money service;
  
  
• Preparing a clear and transparent service charge budget;
  
  
• Through regular inspections ensuring that the building is in good working order and that any repairs are carried out in a timely manner and are of a high standard;
  
  
• Maintaining accounts and collecting service charge payments;
  
  
• Company secretarial duties.