Fifteen years of neglect put right in five years

Common Ground began management of Roebuck Court in May 2011 following more than 15 years of management by a national property management company. At the time of Common Ground’s takeover, the estate was in a poor state both financially and structurally. The following issues needed to be addressed:

• The internal communal areas had not been re-decorated for 15 years and several maintenance items, going back several years, had not been attended to
• There were around £30,000 of service charge arrears (nearly one third of the annual budget)
• Site running costs had been allowed to spiral and appeared not to have been regularly reviewed
• The site had a poor insurance record and no procedure for managing or qualifying claims

In the first month of management, Common Ground reviewed all contracts and, in consultation with the one remaining director, created a five-year plan and budget to turn the site around. We arranged an Annual General Meeting within 3 months of Common Ground’s appointment to introduce ourselves, explain our 5 year plan and obtain feedback from leaseholders.

Maintenance and re-decoration

Initial quotes to re-decorate the internal communal areas came in at around £50,000. It simply wasn’t possible to commence this project immediately without a significant increase in the service charge. The feedback we received at the meeting is that most owners could not bear a substantial rise. More urgent maintenance tasks were prioritised and we gave the leaseholders timescales for outstanding maintenance tasks including the internal re-decoration. The internal re-decoration was completed on schedule and under budget by some £15,000.

Service Charge Arrears

Immediate efforts were made to collect the outstanding service charges. In most cases, it was just a result of poor debt collection procedures by the previous agent. We were able to collect 75% of the outstanding charges within 90 days without dispute. The remaining outstanding debtors were referred to the freeholder solicitors and all debts were successfully collected with legal costs being met by the defaulting leaseholders.

Spiralling Costs

A review of all costs identified savings of nearly £8,000 per annum without any reduction in service. For example, there was a contract in place whereby the access control systems for the entire site were rented rather than owned. Several opportunities had been missed to end this contract and transfer ownership. Common Ground initiated this transfer realising immediate savings of £6,000 per annum. An alternative contractor was sought to replace the maintenance aspect of the cancelled rental agreement at a cost of less than £500 per annum. Many of the incumbent contractors were travelling large distances and were more local to the former managing agent (based in Brighton). Local contractors were hired to replace them which reduced costs and improved service.

Now the directors have 24/7 access to the financial information at Roebuck Court through Common Ground’s unique online accounts system. Read more about Common Ground’s approach to financial management.

Insurance Management

The insurance for the site was consuming 30% of the annual budget and seemed overly high. It was discovered that there was no control over claims and any incident reported to the insurer was logged as a claim irrespective of whether a claim proceeded.

Common Ground met a representative from the insurer to establish ways of reducing the annual premiums. A risk management programme was agreed and the insurance premiums, as of 2015, have reduced by more than a third, a saving in excess of £9,000 per annum.