All eggs in one basket?
There is considerable disquiet amongst owners of leasehold property about how effectively they are served by managing agents and how much control they can in practice exercise over property in which they share ownership or responsibility for with other leaseholders in the same building.
A regularly occurring feature of this market is that churn takes place from one agent to another with little sight of improvement in cost effectiveness and overall building state.
Directors of residential management companies are usually unpaid volunteers keen to offer their time to serve their fellow leaseholders with a view to keeping the building in good order. Managing Agent firms are knowledgeable professionals.
Advice given to Boards needs to be clear, actionable and reliable. However, it is usually only coming from one source, the Managing Agent. Unfortunately there have been many well publicised examples of poor quality advice and managing agents pursuing their own self interest rather than the interests of the residential managing company to which the directors have been appointed.
How Managing Agents work
Managing agents are usually appointed by Resident Management Companies (RMC’s) to undertake the functions of the RMC as set out in the property lease. This removes from the RMC the practical problem of finding contractors to undertake works, collect the service charge and perform other administrative duties. In effect, the RMC’s duties are sub-contracted out to the Managing Agent.
However the legal relationships set up by the lease remain intact and the resident directors remain subject to the statutory duties imposed by the Companies Act. This creates risks for the directors. Risks that may not be well understood without professional advice. And risks that could be avoided by retaining independent advisors.
Company Secretaries working with Leaseholder Boards
Company Secretaries bring good working knowledge of director’s duties and the legislative framework of companies as standard. Specialist firms like MTM LLP know the leasehold environment inside out and understand the importance of providing top quality, confidential and independent advice to resident directors. They will also usually be appointed to scrutinise the finances of the RMC, help with budgets and service charge setting, provide advice and assistance negotiating contracts. Importantly, they can provide continuity in the event of managing agent change and clear actionable professional advice to help resolve issues.
