When you own a flat or apartment, there is often a management company that manages the services for the block. Each flat owner will pay a service charge towards the cost. However, we do now often see freehold houses on estates with the same type of management company. Why is there a management company and what exactly does this mean for you?
Management companies can be created in one of two ways. In most cases, the developer will create the company, which will in turn employ a managing agent to provide the services. However, where there is a smaller estate with just a handful of houses it is more likely that the owners of each property will take a share in the management company and collectively run it. The latter option gives the owners more control on expenditure. However it will require time and effort from the owners to run the management day to day.
| What does a management company do?
The management company services will be detailed in the deeds to your property. In most cases, it will deal with the maintenance of any shared areas such as footpaths and steps; landscaping and maintenance of grass and open spaces.
Each property owner on the estate will pay an annual management fee for these services. Those fees will vary between estates depending on the size of the estate, the location and the services provided. You will be able to check the annual charge before purchasing the property. However, the charge can vary slightly from year to year.
| Will this affect the sale of my property?
Management companies on housing estates are becoming more common and should have no effect on your sale. However, the purchaser will require extra documentation from the management company which could cause some delay.
Many property owners are not aware that they need the management company documentation in order to sell the property. This will include the formation of the company documentation, accounts, service charge expenditure and budgets and payment history. Larger property management companies will provide a management pack, but will often charge several hundred pounds to provide this to your solicitor. Your conveyancer will advise you on when the pack is required, however it should be requested early to avoid any delays to the sale. When there the management company is run by the owners, they are likely to charge less to obtain the management pack.
We will let you know about any additional fees relating to the management company as soon as we find out.
There may be a restriction on your property title in favour of the management company. This means that you will need the management company’s consent to sell the property. They will normally only provide this consent if you have paid all fees up to date. The purchaser will also need to comply with the obligations and enter into a covenant with the management company when taking over the property. The management company will detail all of their requirements in the management pack. It is important to note however that the purchaser may be required to pay notice fees on completion.
If you are selling or buying a property and there’s a management company involved, it is important to get specialist conveyancing advice. Call our team free on 0800 988 7756 or get an instant conveyancing quote.