Five ways to reduce your service charge

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By Alan Draper | Apr 2020
  1. Ensure that you know where your service charge is being spent.

Under section 21 of the Landlord and Tenant Act 1985, leaseholders have the right to demand a summary of service charge costs. For further details of the processes involved and your rights and remedies go to our knowledge base section on leasehold Law

Common Ground uses a web-based accounting system and directors of resident management companies have access to accounts information 24/7 with re-conciliations completed on a monthly basis.

  1. Shop around for contractors.

Many property managers have agreements with a small number of contractors and will often take a commission from those contractors in return for contracted work. These agreements are of little benefit to leaseholders as the lack of competitive tendering provides no incentive for a contractor to offer their best price.

Like all well-established block management companies, Common Ground also has a number of trusted contractors, however, for any significant work, Common Ground advocates competitive tendering and indeed obtains a minimum of three, informing all contractors that they are in a competitive tender process. Most block managing agents will only do this as part of a section 20 (of the Landlords and tenants act) consultation.

  1. Ensure that your property manager agrees (contractually) to declare all and any commissions.

Whilst it is not illegal to take commissions most property managers work to the standards of a respected professional body e.g. Royal Institute of Chartered Engineers (RICS), Institute of Residential Property Managers (IRPM) or The Association of Residential Managing Agents (ARMA) and in general these bodies state that commissions must be declared.

Unfortunately, there is no legislation or verification process through the above listed organisations to ensure that a managing agent doesn’t take undeclared commissions. To overcome this limitation, Common Ground Estate & Property Management provides customers, on request, with a report showing the breakdown of it’s revenue streams.

  1. Employ a locally based managing agent who will likely employ locally based contractors.

Some managing agents agree to manage properties several hours travel time from their offices, often sending contractors to a site who are local to them rather than the site under management……and guess who pays for the travel time?

  1. Check your insurance is competitive

Insurance is often one of the largest single costs and it is important to ensure that your managing agent obtains more than one quote. Many managing agents operate “portfolio” schemes which is perfectly legal, however, do ensure that your managing agent has compared the cost of entry to their portfolio scheme with quotations from other insurers.

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