When you own a flat or apartment, there is often a management company that manages the services for the apartment block. Each flat owner will pay a service charge towards the cost. However, more and more often we are seeing 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 the majority of cases, the developer will create a management 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 which 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 the management company documentation is required 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 solicitor will be able to 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.

Restrictions

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 all fees are paid 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. These can be anything up to £100.00.
If you are selling or buying a property (including new build properties, which are likely to involve a management company), get in touch with our specialist team. Call us on 0800 988 7756.
 
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