Learn yet more about leasehold property, residential property management, freeholds and property management companies

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Frequently Asked Questions 2 - More Q & A

General Property Management Questions and Answers

What is leasehold?

What is a lease?

What are your responsibilities?

How is the building insured?

What are my responsibilities as a Residents' Management Company Director?

Can I sub-let my property?

Can I make alterations to my property?

Can I keep pets in my property?

Why do we need property managing agents and what do they do?

When will VFM visit my development?

What do I do if I want to complain?

How to get started?

Current Legislation.

Getting Started.

What is a leasehold?

Leasehold flats or apartments can be in purpose-built blocks, in converted houses or above commercial or retail premises.

Leasehold ownership of a flat is simply a long tenancy, the right to occupation and use of the flat for a long period - the 'term' of the lease. This will usually be for 99 or 125 years and the flat can be bought and sold during that term. The term is fixed at the beginning and so decreases in length year by year. Thus, if it were not for inflation, the value of the flat would diminish over time until the eventual expiry of the lease, when the flat reverts to the landlord (although an assured tenancy would then become a possibility).

The ownership of the flat usually relates to everything within the four walls of the flat, including floorboards and plaster to walls and ceiling, but does not usually include the external or structural walls. The structure and common parts of the building and the land it stands on are owned by the landlord, or freeholder, who is responsible for the maintenance and repair of the building.

The landlord can be a person or a company, including a local authority or a housing association. It is also becoming increasingly common for the leaseholders to own the freehold of the building, through a residents' property management company effectively becoming their own landlord. With the introduction of right to manage or RTM, qualifying lessees now have a statutory right to take over the landlord's management duties. Under RTM, it is important to realise that the leaseholders do not own the freehold but are nevertheless able to manage the building as if they were the landlord.

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What is a lease?

A lease is a contract between the leaseholder and the landlord giving conditional ownership for a fixed period of time. It is an important document and leaseholders must ensure that they have a copy and that they understand it. The wording of the leases is usually in legal language and can vary from property to property. Leaseholders who cannot understand their lease should get advice.

It is difficult to change the conditions of the lease after you buy, so make sure that the services provided in the lease are those that you want or can accept.

The lease sets out the contractual obligations of the two parties: what the leaseholder has contracted to do, and what the landlord is bound to do. The leaseholder's obligations will include payment of the ground rent (if any) and contribution to the costs of maintaining and managing the building. The lease will probably also place certain conditions on the use and occupation of the flat. The landlord will usually be required to manage and maintain the structure, exterior and common areas of the property, to collect contributions from all the leaseholders and keep the accounts.

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What are your responsibilities?

Principally, these will be the requirements to keep the inside of the flat in good order, to pay (on time) a share of the costs of maintaining and running the building, to behave in a neighbourly manner and not to do certain things without the landlord's consent, for example, make alterations or sub-let. The landlord has an obligation to ensure that the leaseholder complies with such responsibilities for the good of all the other leaseholders. These rights and responsibilities will be set out in the lease. It is important to note that where the residents own their own freehold through a property management company, they are still bound by the terms of the lease and retain the status of being leaseholders, as well as being members of the freehold management company.

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How is the building insured?

The lease will normally require the landlord to take out adequate insurance for the building and the common parts, and will allow recovery of the cost of the premium through the service charge. The property management agents will ensure that the buildings insurance is renewed each year and we recommend that the insured value is updated each year to reflect current rebuilding costs. The policy will not normally cover the possessions of individual leaseholders and leaseholders should therefore arrange their own separate contents cover.

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What are my responsibilities as a Residents' Management Company Director?

Your responsibilities as a Residents' Management Company (RMC) Director are the same as for any Company Director. Consequently you have statutory and fiduciary duties that must not be taken on lightly. In simple terms however you will be responsible for ensuring that the development is managed properly and cost effectively. To this end you will need to work with your fellow Directors to agree a budget with the property management agents and to ensure that the members of your property management company contribute service charge payments on time and in full. You will usually need to hold meetings in accordance with the firms memorandum and articles of association and to ensure that you consult with your members/shareholders regularly.

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Can I sub-let my property?

Most leases allow for the sub letting of the property, subject to obtaining the prior consent of the landlord/directors of the RMC, which can not be unreasonably withheld. It is not normally permissible to sub-divide or sub-let parts of the property. Any resident wishing to sub-let their flat should contact VFM. It is vital that VFM are advised as to whom resides at the property including contact details as in the event of an emergency contact can be established. Tenant registration should also allow your tenant to access VFM's dedicated out of hours emergency helpline however this is subject to your property or estate management company signing up to this emergency facility.

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Can I make alterations to my property?

Most leases and transfers include restrictive covenants prohibiting alterations to either the plan or the elevations of the property without prior written consent. Such alterations will include the replacement of windows, the removal of internal walls, installing external lights and the construction of an extension. Residents wishing to make alterations should apply to VFM in writing detailing the precise works to be undertaken including the appropriate plans and specification relating to the proposed works.

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Can I keep pets in my property?

This is dependent on the terms contained within your Lease or transfer Document. Most Leases prohibit pets or require written consent of the Landlord / Directors of the RMC before a pet is allowed to reside in the property. Some older properties do not include such a restriction.

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Why do we need property managing agents and what do they do?

Not all freehold or leasehold properties have managing agents but most do. Maintaining the common areas, the fabric of the building and the grounds are important elements in ensuring the value of your property is maintained. Poorly managed developments can deteriorate quickly and become less attractive to purchasers. The costs associated with good property management services are often less than it would cost to manage say a house with the same services, particularly where your property management agents have considerable purchasing power.

The property manager is responsible for ensuring that many essential things happen at your development and these are principally as follows:

(i) To make sure the building remains properly insured, at the right level and with appropriate cover. This might include engineering insurance for lifts and other plant, Directors and Officer Liability for Directors of a Residents' Management Company and of course essential buildings insurance that will often include terrorism cover together with common area only contents cover.

(ii) To provide basic services on site including cleaning, gardening, window cleaning, lift maintenance, entry system maintenance etc. In fact just about any service that your development requires,  can arrange. This includes anything from spa water testing to pigeon control, it just depends on your development's needs and the services agreed with your landlord or developer.

(iii) Health and safety is a major part of estate property management which protects you and the people that work on your block of flats. Typically on a larger estate, we might arrange an annual Health & Safety risk assessment, periodic water testing, dry riser tests, fire alarm testing, lightning conductor testing, emergency lighting tests, 'mansafe' or cradle testing, lift testing as well as electrical and gas testing. In addition we will ensure that everyone who we employ on your development is properly qualified and insured.

(iv) All of the above is backed up by an inspection regime that not only provides a visual overview but will seek to maintain and indeed enhance the value of your property going forward by ensuring that contracts on site are all being undertaken in accordance with agreed standards.

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When will VFM visit my estate or block of flats ?

Our contract Agreement will usually set the agreed frequency of visits per annum. For most developments we will visit regularly throughout the year to inspect and check on progress, plus specific visits to meet residents' and property management company representatives. Of course reality often means that we visit much more than this, particularly in the early days of a development or where there is a specific matter to resolve.

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What do I do if I want to complain?

In the first instance it is best to speak to your property manager or the administrator for your property. Call or email and we will endeavour to resolve any problem as quickly as possible. If you are not satisfied with your response then we suggest that you write to us detailing the nature of your complaint and we will deal with your grievance in accordance with our complaints procedure. All complaints are logged and reviewed by the Directors and if necessary we will arrange to meet with you in person to find a resolution. We are, of course, also happy to receive your compliments and any comments about how we can improve the services we offer you.

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How to Get Started?

Property owners considering a change of property managing agent might be discouraged by the thought of having to devote significant and very precious time and effort in securing the benefits offered by new managers.

At VFM we set out to ensure this process is made as simple and easy as possible for our prospective clients. We recognise that certain fundamental issues will require client input however by obtaining information directly from the previous agents we aim to minimise the need for unnecessary client involvement in the handover process.

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Current Legislation.

There are five principal Acts of Parliament that are relevant to residential property leasehold management:

  • Landlord and Tenant Act 1985
  • Landlord and Tenant Act 1987
  • Leasehold Reform, Housing and Urban Development Act 1993
  • Housing Act 1996
  • Commonhold and Leasehold Reform Act 2002

The provisions of The Commonhold and Leasehold Reform Act 2002 are now in force stages. Among the many changes the Act has introduced is a new Right to Manage or RTM. This enables leaseholders of flats, subject to qualifying rules, to collectively take over the property management duties of the building without having to prove fault on the part of the freeholder or pay any compensation. This allows leaseholders to have a greater degree of control over the level of service charges set, and the option to appoint their own property managing agents and to select insurers and service contractors.

As disputes are brought before the Leasehold Valuation Tribunal or LVT, interpretation of the new legislation is developing and is bringing clearer understanding as decisions are reported.

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Getting Started.

Property owners considering a change of property managing agent might be discouraged by the thought of having to devote significant and very precious time and effort in securing the benefits offered by new managers.

At VFM we set out to ensure this process is made as simple and easy as possible for our prospective clients. We recognise that certain fundamental issues will require client input however by obtaining information directly from the previous agents we aim to minimise the need for unnecessary client involvement in the handover procedure.

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Visitors to our web site should take professional advice before acting on any of the content., We do not accept any liability whatsoever for any errors, omissions or inaccuracies in the information provided or for any part of its content nor are we responsible for the content on any links to other sites which are provided in good faith. No part of this web site may be reproduced or transmitted in any form, or by any means (electronic, photocopying, recording or otherwise) without the prior written consent of VFM Procurement or VFM Group.

 

 

 

VFM Estate Property Management
Provident House, Beckenham, London Borough of Bromley London, Greater London BR3 1AT GB
Phone: 02086586824 Website: http://www.vfmproperty.com/