According to block management experts Urban Owners, on average 30% of the costs associated with running a block of flats could be avoided, by giving more control and visibility to flat owners. This equates to an average saving of £400 per flat per year.
There are approximately 1.8 million private leasehold flats in the UK1, meaning that across the country, flat owners could be needlessly paying out a total of over £700 million per year.
Flat owners often pay thousands of pounds each year in service charges for maintenance and repairs to their block, yet do not necessarily see value for that money. Slow responses from managing agents, shoddy or expensive repairs and a lack of transparency and accountability are frequent complaints.
However, under the Commonhold and Leasehold Reform Act (2002), leaseholders have the power either to buy the freehold or to acquire the 'Right to Manage' of their block from the freeholder, and are increasingly using this to take control.
In response to this demand, Urban Owners has launched Block Administration Services, a new system of managing leasehold blocks of flats, which puts flat owners in control. The flat owners, rather than a managing agent, direct how money is spent and how services are delivered on their behalf. By using Block Administration Services, flat owners can avoid expensive management fees and ensure transparency over the use of their funds, rather than falling victim to unscrupulous practices that are commonplace in the managing agent industry. Not only does this save money, time and stress, but it can also make the property more saleable.
Steve Wylie, Director at Urban Owners, comments:
"People often spend considerable amounts of time making sure they get the best deal on their own flat's contents insurance, but it is surprising how many flat owners don't stop to consider how they can bring down service charges, which are usually a much bigger expense."
"The simple fact is that many managing agents, sometimes in collusion with freeholders, are taking flat owners for a ride by charging excessive fees, taking commissions and not being accountable for how funds are spent. Flat owners shouldn't stand for this poor service. Urban Owners can help them take control of their block so that it is run more efficiently and cost effectively."
Table A: Average Savings per flat per year
|COST||AVERAGE ANNUAL SAVING (%)||AVERAGE ANNUAL SAVING (£)|
|Management Fee||32%||£ 80|
|Repairs & Maintenance||32%||£ 60|
|Grounds Maintenance||38%||£ 90|
* Legal services, bank & accountancy charges, utilities, security and lifts
1 SOURCE: Association of Residential Managing Agents (www.arma.org.uk)