The Olympus Blog

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QUARTER 1, 2024

The world of UK leasehold and freehold can be mystifying to say the least. It is a feudal system with many of its laws and regulations dating back to 1920 when modern leasehold began. And those laws and regulations are still being upheld today. Therefore, it is not surprising that apart from a handful of properties in the USA and Australia, England and Wales are the only countries in the world to use this system. So you would be forgiven for being bamboozled by it!

We have found in our line of work that a lack of understanding of the complexities of leasehold can lead to a lack of understanding of what the managing agent is actually doing. The purpose of this blog is to answer the question, What Does a Managing Agent Do? Though it should be noted that all agents operate differently so you should always check your contract closely for the particulars.

Leasehold

Firstly, what is leasehold? It will probably come as a surprise to many that if you buy a leasehold property, you do not actually own it. You are leasing it for a term specified in your lease, and for the duration of that term you have the right to occupy the property so long as the covenants set out in the lease are met, and the restrictions are not breached. You are a leaseholder, or a lessee.

The structure and common parts of the building that your property resides in, and/or the land that your property sits on will be owned by a freeholder, or landlord. They have the responsibility for the maintenance, repairs and general upkeep of the structure of the building, the common parts and the communal services. They will also have the provision to insure the building.

The lease is a private and legally binding contract between the leaseholder and the freeholder. As per the legal requirements for a binding contract in the UK, the lese will have:

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    An offer (the exclusive use of the property and shared use of the common parts and services)

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    An acceptance of the offer (the signature)

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    Consideration on both sides (the rights and restrictions)

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    Intention by both parties to be legally bound

It is for this reason that you should always read the lease carefully before signing, and instruct a solicitor if you have any questions or need legal advice.

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The lease may be a tripartite lease with a freeholder and a management company. Usually, this is created when the freeholder wants to retain ownership of the land and the building, but delegate the management and maintenance responsibilities to a third party. The members of the management company will usually be leaseholders of the estate so that they have a vested interest in the management and upkeep.

The lease will set out everything to do with that property – the inclusions and exclusions of your demise; the areas and services that are shared and your rights to those areas and services; the services that the landlord must provide and maintain, and therefore, the services that you must contribute to the costs of; how much you must contribute to those costs; things you cannot do on the estate; things you must do in relation to your property; any additional costs you must pay; and how long you are bound by these terms.

The service charge is the funds collected from all of the leaseholders on the estate to pay for the maintenance, repairs, services, improvements and insurance of the estate, as per Section 18 of the Landlord and Tenant Act 1985. Those funds will be held in trust in a ring-fenced, designated bank account as per Section 42 of the Landlord and Tenant Act 1987.

What is a Managing Agent?

A managing agent is a company (preferably who specialise in block and estate management, like Olympus) who will be appointed by the freeholder or the management company – whoever has responsibility for the maintenance and collection of service charges – to carry out those services on their behalf.

It is also possible that on an estate with no management company, the leaseholders can acquire management responsibilities through Right To Manage. The RTM Company could then appoint a managing agent of their own choice to take on the responsibilities that they have acquired on their behalf. It is important to be clear in this scenario, or the scenario of a tripartite lease, as to who has which responsibilities. For example, has the freeholder retained the obligation to insure the building? If so, that is not one of the responsibilities which the managing agent takes on.

The duties that a managing agent will take on should be set out clearly within a management agreement which will also confirm the fee that the agent will charge for carrying out those duties. The management agreement should also detail any additional services which might fall outside of the management duties and therefore come at an additional fee. This is usually attached in the form of a Schedule of Fees (or similar).

Remember that although it is the job of the managing agent to act on behalf of the freeholder/management company/RTM, it is the job of the freeholder/management company/RTM to act in the best interests of the building and its leaseholders and residents. The client of the managing agent will always have ultimate legal responsibility for the proper management of the estate, compliance with legislation and regulations, and the service charge. So whilst they may delegate the day-to-day management, they should still be setting policies and monitoring work.

In a nutshell, the job of the managing agent is to administrate the terms of the lease. Don’t stop here though – read on for a breakdown of what that involves.

A Managing Agent’s Duties

Finances - Arguably the most important duty of a managing agent is managing the estate’s finances. This includes the service charge, the reserve fund if applicable, and the Ground Rent if applicable. At Olympus Management we will do the following:

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    Opening and handling a client bank account held in trust in the name of the landlord/RTM.

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    Setting up ring-fenced accounts within the client account for the different funds, ie. service charge and reserve fund.

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    Annual preparation of the service charge budget for the financial year.

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    The billing and collection of service charges as often as the lease stipulates and as per the leaseholder apportionments stipulated in the leases.

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    The billing and collection of ground rent as often as the lease stipulates, if applicable.

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    Arrears management and recovery.

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    Providing quarterly financial reports on income, expenditure and cash flow to the client.

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    Preparation of the year-end service charge accounts.

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    Preparation of the year-end company accounts for the client.

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    Management of the reserve fund plan for future major works and capital expenditure.

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    Processing and payment of contractor and supplier invoices – we have four payment runs each week.

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    Administration of payroll and pensions for site staff, if applicable, and monthly payment of their salaries.

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    Monthly reconciliation of the bank accounts.

Lease compliance – almost everything that a managing agent does comes back to the lease. How often should leaseholders be billed? Check the lease. Can I have a dog in the flat? Check the lease. Are there any requirements for subletting my flat? Check the lease. At Olympus, the duties that we will carry out in relation to lease compliance are:

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    Monitoring compliance with the terms of the lease and managing any breaches.

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    Where breaches cannot be resolved, instructing solicitors with the clients approval and liaising with them through to resolution.

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    Representing the landlord at County Court, arbitration and Tribunals.

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    Managing subletting or sales requirements.

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    Administrating Licenses or approvals.

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    Guiding the client on distinguishing between the needs and duties of the company under the Companies Act, and the needs and duties of the company in its role as landlord under the relevant Landlord and Tenant legislation.

Risk Management – whilst finances are crucial to enable the building to operate, there is no disputing that risk management, fire safety, health & safety compliance, and any life preservation management is the number one priority in the management of any building. At Olympus, compliance is at the top of our agenda. We carry out the following duties:

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    Organising periodic health & safety checks, tests and surveys including the fire risk assessment, the asbestos survey, the legionella checks, the gas safety checks, the fixed wire electrical testing and more.

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    Actioning the recommendations within those surveys, or remedials needed following the checks.

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    Ensuring the compliance of high-rise buildings with the Building Safety Act 2022 and Fire Safety Act 2022, including the administration of the Building Safety Case Report, the FRAEW, the gap analysis, the compartmentation survey etc.

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    Ensuring the compliance of buildings over 11m with the Building Safety Act 2022 and Fire Safety Act 2022, including organising quarterly surveys of the communal fire doors and annual surveys of the flat front doors.

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    Producing a Resident Engagement Strategy.

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    Managing the Golden Thread of Information.

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Repairs and maintenance – the lion’s share of a managing agent’s work is the day-to-day management and administration of the building itself and the communal services within that building. At Olympus Management, this includes but is not limited to:

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    Ensuring that planned preventative maintenance contracts are in place for all communal assets and services within the estate, and ensuring that those contracts comply with Section 20 of the Landlord and Tenant Act 1985.

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    Monitoring those contracts and ensuring that the service visits take place.

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    Carrying out monthly site inspections and actioning any necessary repairs.

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    Organising the repairs of any defects that get reported to us.

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    Preparing specifications for minor works and issuing the works orders.

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    Inspecting and signing off any minor works.

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    Administrating buildings insurance claims.

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    Administrating and overseeing any major works, including handling the Section 20 consultations, liaising with the Contract Administrator and keeping residents and leaseholders informed.

Leaseholder liaison – most management companies and RTMs are made up of Directors who have taken the role on a voluntary basis. They prefer to take a step back from leaseholder liaison to avoid any potential conflicts with neighbors. Further to this, if they have instructed a managing agent, then the agent will have all of the information needed to answer a leaseholder query at their fingertips, whereas the Directors won’t necessarily. At Olympus, leaseholder liaison involves:

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    Answering routine enquiries from leaseholders and residents.

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    Keeping leaseholders and residents updated of works taking place on the estate.

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    Communicating any disruption to services or works within the estate to residents.

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    Acting as liaison between leaseholders and Directors.

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    Acting as liaison between leaseholders dealing with flat-to-flat leaks.

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    Handling leaseholder complaints, ie. noise complaints.

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    Providing sales packs and responding to legal enquiries.

Supporting the client – in addition to all of the above, Olympus Management will also support their clients with the following:

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    Administrating the renewal of all insurance policies in the client’s name, ensuring that the client gets the best market rate.

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    Ensuring that all utility meters are in contract at the most competitive rates, and administrating the renewal of those contracts.

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    Taking monthly meter readings and submitting them to the supplier to ensure that the bills are accurate.

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    Draft Estate Handbooks to encompass all lease restrictions, insurance requirements and fire, health and safety requirements.

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    Management of any on-site staff, taking on the role of Line Manager.

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    Preparing job descriptions and handbooks for employees of the client.

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    Advising the Board on Landlord and Tenant legislation.

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    Suggesting management policies.

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    Attending Board meetings and chairing and/or minuting them if needed.

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    Providing quarterly management reports including financial reviews, maintenance and compliance updates, legal updates, and any other general management updates.

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    Reporting on significant leaseholder communications.

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    Document storage and management.

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    Providing the Board with action point updates.

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    Company Secretarial work including preparing and distributing AGM/EGM notices and maintaining the company registers.

How can I find a managing agent?

If you are reading this, then you are already in the right place! We would love to speak to you to find out more about your estate, and tell you more about how we can support you and provide you with a bespoke management plan specific to your needs. Contact us if our services sound of interest to you.

And if you found this blog useful then please do share it. We’d be delighted to hear any comments or feedback.

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After a very successful time working for a boutique firm managing Prime stock across Mayfair and Marylebone, then opening a new office in London Bridge, Ella took a short break from her career to start a family before joining Olympus Management in 2023 as a Director.

Her organisational skills and methodical approach to problem solving make her a key asset to the team, and her personable approach to property management ensures that our clients receive the 5* Olympus Experience.

Ella's a lover of literature and creative writing, though is finding less time for either now that she has a very active son to keep busy! She also loves playing the piano, skiing in the winter, and travelling to new places to experience their culture, but more importantly their cuisine!

We're delighted that she's able to tap in to that passion for literature and creative writing for the articles she's contributing to our blog.