Trusted Property Managers in Kendal

The service charge is the total estimated cost of managing your building during the year and typically includes insurance, management fees, repairs and maintenance, accounting and other miscellaneous expenses. The service charge is calculated by looking historically at the annual costs in previous years, understanding the costs over the next 12 months and assessing potential costs over future years. The service charge budget for the year is normally agreed in advance at an AGM where all leaseholders are invited to discuss and vote. The total service charge agreed at the AGM will then be apportioned and invoiced to each individual shareholder, in accordance with the terms of their lease. At the end of each year an account of what has actually been spent versus budget will be distributed to all leaseholders and any balancing figures collected or refunded to leaseholders in accordance with their lease apportionments.

All service charge monies paid by the leaseholders of each block should be held in a separate, clearly identifiable and ring-fenced client bank account. The recognised bank should be authorised by the Financial Services and Markets Act 2000 and protected by the UK regulator, the Financial Conduct Authority (FCA) and the Financial Services Compensation Scheme (FSCS). Under section 42 of the Landlord and Tenant Act 1987 the block manager should seek written confirmation from their bank that the following conditions are being met:- i) all money standing to the credit of that account is client money, ii) the bank or building society is not entitled to combine the account with any other account or to exercise any right of set-off or counter-claim against money in that account in respect of any sum owed to it or any other account of yours; and iii) any interest payable in respect of sums credited to the account should be credited to that account.

Following appointment, the new block manager will typically contact all existing service providers to understand the scope of services provided and assess whether their cost and standard is fair and reasonable. If the services provided are in line with the block managers expectations, all the appropriate insurance/ certifications are in place and the leaseholders are happy, there is no need to replace the existing service providers. However, it is still best practice to update the existing service agreement to reflect the new relationship and scope of works agreed, particularly where there is no existing formal service agreement. In terms of contractors employed to carry out general repairs and maintenance work, the block manager will typically use a mixture of existing local contractors and contractors they know offer fair and reasonable cost and service standards. For major works, the choice of contractor is determined through a formal section 20 process where everyone has input into the final decision.

In most cases it will be difficult to change the terms of the lease so prospective buyers of leasehold property should always seek specialist advice prior to completion of purchase. Leases in common where all properties contribute towards the same service charge can be varied on a voluntary basis if there is 100% agreement of all parties (i.e. including the freeholder). An appropriately worded Deed of Variation (DOV) is required from a solicitor and if the contents are agreed by all parties it needs to be signed and forwarded to the Land Registry. Costs incurred in relation to lease variations will typically be passed onto leaseholders. If there is a significant majority but not every party agrees, an application can be made to the FTT to vary all of the leases under Sections 35-40 of the LTA 1987. However, even if a significant majority are in favour there are several hurdles that may still prevent a variation being achieved at an FTT. These include whether the variation substantially prejudices any other party to the lease, whether compensation should be paid to any other party of the lease suffering as a result and whether there is any other reason it might be unreasonable to grant the order.

The company secretary undertakes a range of legal, administrative and filing responsibilities on behalf of the RMC and the role is often delegated to the appointed bock manager. Legal duties include maintaining the existence of the RMC by establishing the registered office, keeping the statutory books and records, complying with business stationary rules and ensuring the security of all documents. Administrative duties include taking responsibility for summoning director and shareholder meetings and ensuring proceedings are recorded through formal minutes approved and signed by the chairman. Filing duties include submission of the annual confirmation statement and company accounts to Companies House within strict reporting deadlines to avoid any late penalties, prosecution and fines. Other duties include acting as a signatory, advising the directors to ensure they comply with the articles of association, negotiating with outside advisers and agreeing company contracts if required.