There is an age old saying that “you get what you pay for”, meaning that if something seems too cheap for all the elements you should get in return, it probably is. This applies with property management. Managing agents, like any other business, have costs to cover to recruit and train the best staff; to purchase technology for communication with contractors and clients; for premises and materials; and to ensure they’re abiding by all of the necessary rules and regulations. Scrimp on these and you, as a client, could live to regret it.
That being said, there is no set fee for property management as the cost to manage a development depends on the facilities and features within it; the number of apartments; the level of maintenance and support required; and location. What is key however is that you, as the client, understand how much you are paying for your building management services and have full transparency from start to finish.
What are you paying for?
Typically, your service charge will cover the cost of general maintenance and repairs as well as improvement to the building and the grounds. This includes cleaning, gardening, guttering, painting, roof works and more. The service charge may also cover buildings insurance, electricity, and heating of the communal area. If the property requires security or porters, these would be covered under the service charge too.
For full details of our charges and to discuss how we might cost for your development, please contact us here.
The sinking fund
Your managing agent will also look to accrue a sinking fund or reserve to cover larger pieces of repair or maintenance work required for the development. This is important as it means large and essential repair work can happen quickly without the leaseholders needing to find thousands of pounds at short notice.
This element can often be the reason why so many leaseholders feel their managing agent appears too costly – the service charge is going up and they are not seeing a return. However, if your managing agent is being transparent with you, and displaying this sinking fund and all expenditure on quarterly or half yearly statements then it should be clear where every penny is going and what exactly has been spent vs what is left over.
The service you do not see
The other element that your money is spent on – and this is perhaps one of the biggest reasons not to “go cheap” – is communication. You need a managing agent who is available 24/7 – not just during typical office hours as that is when you are at work. And if you need to contact them because something is wrong, an automated message will not do. You need a quick response from a human being who you can trust will deal with the situation effectively and quickly.
But it is not just about flagging issues, it is also about having someone available to attend board meetings, make site visits and not be overwhelmed by the other properties they must manage. They need to be able to dedicate their time and headspace to ensuring your property is getting the care and attention to thrive now and long in the future.
If you are reading this because you are looking for a new managing agent, cost will undoubtedly be one of your biggest factors in making your decision. If you can take anything away from this article, it is that you are not looking for the lowest figure; you are looking for the best price for what you will get in return.
Be aware that many managing agents will provide you with a cost that looks reasonable but strips out a lot of their services, that they will simply add back on further down the line. This means that elements that come as part of the package for some managing agents such as sourcing supplier quotes or making site visits, will be charged as an extra by another. This could make them a far more expensive option in the long run.
How can you tell a “good price”?
When considering several managing agents, ask them what is covered in the price i.e. do they take commission on supplier services, what could possibly be charged on top of the price they’ve quoted you, how much communication and face-to-face time have they allowed for in that price and if more is required, will they absorb that in the price or charge more? It is also worthwhile asking if you can see an annual statement from another client to get a sense of possible extras.
The more information they can provide in response to these questions, the more likely they are speaking from experience rather than blagging to get your business. What you do not want is for an agency to take your business by overpromising only to fail to keep up on their promises further down the line and presenting you with hefty price increases. How can you forecast the cost of keeping your property if you do not have transparency from the beginning?
Finally, experience.
Another element you are paying for is experience. New kids on the block will be basing predicted costs for your property on guesswork and quotes they have hastily gathered from untested suppliers. Experienced managing agents on the other hand are highly likely to have managed properties that match your development both in size and complexity and will be able to predict the required sinking fund with impressive accuracy.
Experience on the face of it costs more but if you choose a partner who does not know what they are doing, poor decisions may mean new work will have to be redone at vast expense a year later. Not only that, but experienced managing agents will have established relationships with the best contractors which means you receive the highest standard of work and at “mates rates” prices because it’s likely they have a contract in place to deliver on a number of properties; not just your development.
With 15 years of experience serving properties across the UK, we are immensely proud of the value we bring our clients and would love the opportunity to show you what high quality property management is. After all, we are the managing agent you’ll stick with.