What is a management company?

What do they do?

Management companies are responsible for:

• Collecting service charges - From all leaseholders in the building
• Arranging maintenance and repairs - Organising work on the building
• Managing shared areas - Hallways, lifts, gardens, car parks
• Organising building insurance - Arranging insurance for the structure
• Keeping accounts - Maintaining records of income and expenditure
• Dealing with contractors - Hiring and managing tradespeople
• Enforcing lease terms - Ensuring residents comply with the lease

They act on behalf of the freeholder to manage the building professionally.

When are they used?

Management companies are typically used for:

• Leasehold flats and apartments - Most common scenario
• Developments with shared facilities - Buildings with lifts, gardens, car parks
• Large residential blocks - Where professional management is needed
• Mixed-use developments - Buildings with both residential and commercial units

Some freeholders manage properties themselves, but many use professional management companies.

Who pays for them?

You pay for the management company through your service charge. The management company's fees are included in the service charge you pay, along with:

• Building maintenance costs
• Insurance
• Cleaning and grounds maintenance
• Reserve fund contributions

The management company's fee is usually a percentage of the total service charge or a fixed annual amount.

What are your rights?

As a leaseholder, you have rights regarding management companies:

Information rights:

• Annual accounts - You should receive a breakdown of service charges
• Notice of major works - You must be consulted before major expenditure
• Inspection of accounts - You can request to see detailed accounts
• Summary of rights - The management company must provide information about your rights

Consultation rights:

• Major works - You must be consulted if works cost more than £250 per flat
• Long-term agreements - For contracts over 12 months and worth more than £100 per flat per year
• Right to nominate contractors - You can suggest alternative contractors

Challenge rights:

• Dispute service charges - Through the First-tier Tribunal if charges are unreasonable
• Right to manage - Take over management of the building yourself (with other leaseholders)
• Request information - The management company must provide information when requested

What if they're not doing their job?

If the management company isn't performing well:

• Raise concerns - Contact them directly about specific issues
• Work with other leaseholders - Form a residents' association to have more influence
• Request information - Ask for accounts and details of work done
• Right to manage - You and other leaseholders can take over management
• Complain to the freeholder - If the management company is appointed by the freeholder
• Seek advice - From a solicitor or leasehold advisory service

You have legal rights, so don't hesitate to use them if the management isn't adequate.

Can you change management companies?

Changing management companies can be done through:

• Right to manage - You and other leaseholders take over management
• Freeholder agreement - If the freeholder agrees to change
• Collective enfranchisement - Buy the freehold and then choose your own management

Right to manage is the most common route if you want to change how the building is managed. You need at least 50% of leaseholders to agree.

What is "right to manage"?

Right to manage allows leaseholders to:

• Take over management - Without buying the freehold
• Choose your own management company - Or manage it yourselves
• Control service charges - Have more say over costs
• Improve the building - Make decisions about maintenance and improvements

You need at least 50% of leaseholders to agree, and you form a company (Right to Manage company) to take over the management.

What should a good management company do?

A good management company should:

• Communicate clearly - Keep residents informed about work and costs
• Provide detailed accounts - Show exactly what money is spent on
• Respond to queries - Answer questions and address concerns promptly
• Get value for money - Obtain competitive quotes for work
• Plan ahead - Maintain the building proactively, not just reactively
• Consult residents - Involve leaseholders in decisions about major works
• Keep proper records - Maintain accurate accounts and documentation

If your management company isn't doing these things, you may want to consider your options.

Summary

• Management companies manage and maintain buildings on behalf of freeholders
• They're typically used for leasehold flats and developments with shared facilities
• You pay for them through your service charge
• You have rights to information, consultation, and to challenge unreasonable charges
• You can take over management through "right to manage" if you're not happy
• A good management company communicates well, provides detailed accounts, and gets value for money
• If your management company isn't performing, you have options to address this
• Working with other leaseholders can give you more influence over how your building is managed