What is the role of a block manager?
A Block Manager's, or Managing Agent's, principal role is to oversee the management and maintenance of a property's communal areas. They will collect your service charge, manage your building's sinking fund, inspect your building regularly and respond to requests from leaseholders.
The key duties include:
- Ensuring that the property is kept in good repair and condition through ad-hoc repairs and maintenance.
- Ensuring that all equipment, including boilers, lifts and fire safety systems, are maintained in accordance with the manufacturer's requirements.
- Managing the service charge, which includes setting the service charge budget and recovering service charges from the leaseholders.
- Arranging insurance for the property and any mechanical and electrical services.
- Responding to leaseholder enquiries, managing requests and dealing with property disputes.
At Islington Properties, we understand that all buildings and clients are unique; as such, we do not believe in a cookie-cutter approach to block management, and instead, we offer our clients a bespoke package catered to each building and client's individual characteristics and needs.
What is an RMC, an RTM Company and a Freeholder?
An RMC (Residents Management Company) and an RTM Company (Right-To-Manage Company) effectively have the same responsibilities when it comes to the actual management of a building; the differences lie in the setting up of the company and their duties under the lease.
An RMC is usually set up by the landlord/developer upon completion of a building and is typically named within the lease. Essentially, the landlord/developer devolves all their management and maintenance responsibilities under the lease to the RMC, enabling the leaseholders to oversee the maintenance of their building either directly, or by appointing a managing agent.
The Commonhold and Leasehold Reform Act 2002 introduced rights for leaseholders to collectively take over the management of the building from their landlord via an RTM Company, provided that certain qualifying criteria are met. An RTM Company is a limited company set up as a tool to allow leaseholders to take over the management of the building from their freeholder. There are no changes to the lease itself, but the RTM Company will assume the landlord's responsibilities regarding repairs and maintenance, the administration and facilitation of the service charge, and the granting of approvals under the lease. As with RMCs, the leaseholders can oversee the maintenance of their building either directly or by appointing a managing agent.
The freeholder (also referred to as the landlord) is the person or company that owns the building structure and the land on which it sits. Leaseholders will typically pay the freeholder a ground rent under the lease.
The Leasehold Reform, Housing and Urban Development Act 1993 introduced rights for leaseholders to collectively buy the freehold of the building, provided that certain qualifying criteria are met.
In the absence of an RMC or RTM Company, the freeholder is responsible for the management of their building, and they will usually appoint a managing agent to manage the building on their behalf.
What is the process for appointing a new block management company, and how long does it take?
Most of the time, when appointing a new block management company, all you need to do is find a management company you want to switch to, and they will do all of the handover on your behalf. This can be a lengthy process, as you may wish to vet multiple agents to find a good fit.
Once a managing agent has been appointed, the outgoing managing agent will have a duty to hand over all property and accounting information efficiently and professionally. Regarding how long it takes to switch, under The Property Institute standards, we must complete the handover in three stages:
- Stage One: all static property information, such as leaseholder contact information, insurance policies, contractor and supplier details, and health and safety documents, must be provided within 30 days following the handover date.
- Stage Two: key fobs, statements of tenant arrears, and information regarding any pending sales must be provided by the handover date at the latest, along with the transfer of any unallocated service charge funds.
- Stage Three: comprehensive reconciled accounts, including detailed accruals and prepayments, must be provided no later than 90 days following the handover date.
How are service charges calculated?
Service charges are calculated by considering the current running costs of your building and by regularly inspecting it to catch minor problems before they become more significant. Sometimes, major works are needed, which can add a temporary additional cost to your annual service charge.
The method used to calculate service charges varies but will mostly be set out within the lease; this may include:
- Simple fraction: for example, if there are 20 flats, each will pay one-twentieth of the service charge expenditure.
- Simple percentage: the proportion expressed as a percentage rather than a fraction, so one-twentieth would be 5%; and
- Variable percentage: some properties may pay a larger proportion than others to reflect the overall size or number of rooms.
Whichever method is stated in the lease must be applied; if it is not, any demand for service charge would not be contractually compliant, and the leaseholders will be under no obligation to pay the service charge until they are served a contractually compliant service charge demand.
What is a sinking/reserve fund?
A sinking or reserve fund is a sum of money collected via the service charge. This fund will be used for regular maintenance, like external painting and internal redecorations, and periodic more significant expenditures, like lift or roof replacements.
The managing agent oversees the funds and will use them for major or minor maintenance to keep the service charge payments as consistent as possible.
What is Section 20 Consultation?
Section 20 of the Landlord and Tenant Act 1985 states that leaseholders need to be consulted on any qualifying works (e.g. repairs or maintenance) where the individual service charge contribution of any one leaseholder exceeds £250. Consultation is also needed for any qualifying long-term agreements (e.g., maintenance and/or service agreements) that are for more than twelve months and where the individual service charge contribution of any one leaseholder exceeds £100.
The process has three stages, which are as follows:
- Notice of Intention: this states the intention to undertake qualifying works / enter into a qualifying long-term agreement and why. Leaseholders have 30 days to make written observations on the proposals and to nominate a contractor from whom a quotation should be obtained.
- Notice of Estimates: this summarises the proposals/estimates obtained. Leaseholders have another 30 days to make written observations about the proposals/estimates obtained.
- Notice of Reason: this should be issued within 21 days after the contract has been entered into. It doesn’t need to be served where the chosen contractor was nominated by a leaseholder, or if the chosen contractor submitted the lowest estimate.
In some circumstances – especially if the works are urgent – it may be possible to obtain a dispensation from some or all of the consultation requirements.
Can you take over during Section 20 works?
Yes, we can take over at any point during planned words, whether you are still in the consultation stage or midway through major works. We can review the proposed works and will work with you to complete them alongside the existing contractors.
How often will you inspect my building?
At Islington Properties, the frequency of site visits will depend on the size of the building and its services. For most of the buildings we manage, site visits are conducted monthly.
We also only take on the management of buildings within a reasonable commutable distance from our office in Islington, meaning we can be on hand for any impromptu site visits should there be a requirement.
How do I extend my lease?
Under the Leasehold Reform Housing and Urban Development Act 1993, you have the right to extend your lease by a further 90 years as long as you have owned the property for over 2 years, and this will also reduce the ground rent payable under the lease to a 'peppercorn'. You will need to approach your freeholder to apply for a lease extension, who is entitled to charge based on the formula set out in the 1993 Act.
As a managing agent, we can't facilitate this, but you can access detailed advice on The Leasehold Advisory Service website. The Leasehold Advisory Service is governed by a board appointed as individuals by the Secretary of State for the Ministry of Housing, Communities & Local Government. For further advice, please speak to a solicitor.
It should be noted that the Leasehold and Freehold Reform Act 2024 introduced rights for leaseholders to extend their leases to a term of 990 years – and to reduce the ground rent payable under the lease to a 'peppercorn' – whilst doing away with the requirement for leaseholders to have owned their property for over 2 years before making an application. Although the Act has passed into law, most of its changes – including lease extensions – are not expected to come into force until 2025 or 2026.
