Responsibilities within a residential development can vary based on its type. Here’s a snapshot of how responsibilities are typically distributed:
Distinguishing Between Freeholders and Leaseholders
A freeholder, often called the ‘landlord’ or ‘building owner,’ holds ownership of the building and the land it’s constructed on. This could be an individual or a corporation. They may either directly manage the development or, more commonly, engage a skilled managing agent (or property manager) for the purpose.
Leaseholders, on the other hand, are the individual property owners within an apartment block or specific property types under the leasehold system in England and Wales. While they own the property based on a lease, their maintenance responsibilities extend to the interiors of their homes. They’re also financially responsible for the upkeep of common spaces in their development, primarily through service charges.
Service Charge: Definition and Computation
Service charge represents a fee, usually collected bi-annually or annually from leaseholders, dedicated to covering maintenance expenses of the development, including common amenities like elevators, hallways, and gardens. To determine this charge, upcoming maintenance needs are forecasted, culminating in a service charge budget. Subsequently, this budget is equitably distributed amongst the leaseholders.
Role of a Resident Management Company (RMC)
An RMC is a distinct entity, often initiated by a developer of a newly constructed development, with the mandate to manage the building in favor of the leaseholders and residents. They can either manage this directly or delegate it to skilled managing agents like Oak Property.
While being an RMC director is an honorary position, these directors are chosen by the collective leaseholders.
An RMC shoulders the responsibilities of:
- Ensuring building compliance with relevant statutes and health & safety norms.
- Orchestrating repair and maintenance endeavors.
- Deciding the expenditure of service charge funds.
- Representing residents and making community-beneficial decisions.
Right to Manage Company
Another homeowner-centric management paradigm is the Right to Manage (RTM). It empowers leaseholders with the statutory right to assume property management from the freeholder by forming a distinct entity – the RTM Company. This right, however, is exclusive to apartment leaseholders. Similar to RMCs, RTM Companies can self-manage or solicit professional managing agents.
A property manager supplements the competencies of an RMC or RTM Company, offering tailored guidance. With expertise in estate finance, building regulations, and landlord-tenant law, they aid these companies in navigating legal intricacies.
Seasoned managing agents routinely inspect the development to assure its pristine condition, manage work contracts, and coordinate repair and maintenance tasks.
Additionally, they undertake administrative and financial duties:
- Updating financial ledgers.
- Overseeing service charge budgets and accounts.
- Service charge collection.
- Arrears management.
- Filling roles like Company Secretary and overseeing registered office requirements when needed.