Don't let property management charges go through the roof
Published 02/03/2012 | 06:00
Do you live in an apartment block or housing estate that is managed by an agent? How much is your management fee each year? Is it too much?
"Owners should have seen a 30pc or more reduction in management fees," advises Brian Keenan, Managing Director of Keenan Property Management, "if the finances are in good shape.
"But some owners are paying ridiculously high management charges," claims Keenan. "These are rates which were put in place during boom times and are certainly not reflective of today's landscape."
Keenan points out that there is better value to be had now when it comes to everything from painting to landscaping, lift maintenance and even waste collection. "No one questioned the charges before", he says, "but times have changed. It's time to live in the real world."
If the management charge is too high, chances are fewer people will pay it and this is a very real problem that KPM, who manage 10,000 properties across 90 developments, are seeing.
"In some cases as many as 40pc of owners in a single development are not paying the fee," says Keenan. He adds that this is more likely to happen in newer blocks where owners are in negative equity and struggling to meet bills, and also in the Section 23 investment developments where no owners are residents.
If some people aren't paying, all they can do is write letters and more letters asking them to pay. The only other solution is to take the costly route of court action against the owner.
But what are the consequences of owners not paying the fee? Firstly, other owners may have to pay more in order to have enough money in the pot for services. More worryingly, safety and maintenance could suffer.
Keenan's colleague, Property Manager Sean Waters, says he has seen situations where "fire safety systems have been disabled, there is no lift cover, no fire cover and no buildings insurance." This, he says, is "storing up problems for the future".
So it's crucial that management fees are paid. But no one wants to pay above the odds, so how can you be sure you're getting a good deal?
The key lies in getting involved.
In a nutshell, the complexes that are best are those where everyone pays a reasonable management fee and where owners are involved in its running, ensuring they receive regular financial information and are paying the best price for services.
Here's how to do it:
- Know that, as an owner, you are automatically a member of the management company. This gives you a say, and a vote, in how things are run.
- If the original developer still has a grip on the management, be aware that this is now against the law. Ownership of common areas should have been transferred to the owners' management company by the end of September last year.
- Get involved by becoming a director or asking the directors to organise a meeting where the running of the complex can be discussed.
- Ask the managing agent to attend and to go through all the bills to show how they are getting best value for you.
- Remember, you (the owners' management company) have hired the agent. If you're not happy with the service they provide or the fact that bills are too high, switch to another agent.
- The members of the management company must approve the management charge and the costs to run the particular development.
- Keep attending meetings and in particular the AGM so that you get your say.
- Make sure you receive regular information on bills to be paid and accounts. Check and see if the bills are too high and, if so, ask the agent to find better value.
- Approach all costs as you would in your own home. Make sure that services are switched to find better deals, and that several quotes are sought for any specific work required.
- Ensure money is put aside in a sinking fund. This is important for any big work that may need to happen and it's also a legal requirement.