Top 10 laws 'to know': block management
Block management is just what is sounds like: managing blocks of flats where the individual properties are owned by various leaseholders (or share of the freehold), then another individual or company manages all the properties within that block. It involves things like arranging for maintenance, collecting service charges and looking after the communal areas, and managers have a number of important legal responsibilities.
With many portfolio landlords now looking for new ways of using their knowledge and expertise to earn extra income, managing other people’s properties is becoming increasingly popular.
So, here is our round-up of the top 10 points you need to know about the laws covering block management and your obligations as manager:
- Knowing all the lease terms. Often, individual flats in the same block can have different lease terms. As manager, you need to know what each owner is permitted to do and what you’re required to do for them.
- Enforcing the lease terms. If any leaseholder breaches the terms of their lease – e.g. by sub-letting via Airbnb or making unauthorised alterations to the property – you’ve got to deal with the issue.
- Insurance. Each owners’ service charge includes a contribution to buildings insurance for the whole block. You’ll have to inform the insurer:-
- How many flats are owner-occupied
- How many are rented out
- What type of tenants are living there
This helps ensure you have the right cover.
- Health & safety. As manager, you’re responsible for making sure the site always complies with health and safety law and that all maintenance works are carried out by approved contractors.
- Fire safety. You’re responsible for having a risk assessment carried out and must ensure the right fire safety measures are in place for the communal areas, including fire doors, alarms, extinguishers, etc. The best way to do this is have a professional fire safety representative visit to carry out the assessment and inform you what’s need.
- Routine inspections. You’ve got to schedule regular inspections of the communal areas, inside and outside the building, to make sure the property remains in good condition and nobody is violating any of the terms of their lease.
- Keeping detailed records. It’s your responsibility to keep clear, detailed records of all works, payments, inspections, etc.
- Accounting. Among other things, the block manager is responsible for:
- Collecting service charges and ground rent
- Budgeting and making sure there’s always enough money in the management account
- Allocating resources
- Making sure accounts are prepared correctly for the shareholders of the block.
Usually, the management company will appoint an accountant to make sure all the financial business is carried out correctly.
- Section 20 Notice for works to the building. This is complex but, if certain building works need to be carried out and the cost to each individual leaseholder will be more than £250, there is a three-stage consultation procedure that the manager needs to follow. If it’s not done properly, you as the management company could be liable for any cost of the works, over and above £250 per leaseholder.
- Keeping up to date with legal changes. You must make sure you know about and understand all new legislation and amendments to existing laws that will affect the block and your management of it.