Budgets are as good as a property manager will be which can only ever be an informed best guess. Whilst every property manager will exercise their skill and experience to make sure all items included within the budget can be accurately forecasted; actual expenditure at the end of the year can vary slightly due to unforeseen circumstances.
Areas that are undemised (see demised) will be common parts and are enjoyed by everyone. E.g Communal Gardens or Hallways.
A covenant in a lease describes an obligation owed by one party to another. A lease will contain many covenants, which states who has agreed or is obliged to do what. For example, the freeholder covenants/agrees with the leaseholder they will insure the whole building, or a leaseholder covenants/agrees to obtain the landlord's consent before subletting.
Once the accounts are finalised, the accountant will inform us of any overspend or underspend. This overspend (deficit) or underspend (surplus) must be debited or credited (as appropriate) to your account. If money is left over at the end of the year, it must be credited back to you, and should an overspend occur, we will need to invoice and collect it from the lessees. This is something that we must comply with as dictated by the terms of the leases
This term refers to the area which the leaseholder has exclusive rights. E.g, the ground floor leaseholder may have a demised garden which is exclusively their own.
Is a person whom on a voluntary basis, undertakes a very specific role to assist the running of the company who are responsible for it’s management. This is an all encompassing and important role.
First Tier Tribunal - Are an independent party who handle applications and appeals relating to disputes over property and land. The FTT replaced the Leasehold Valuation Tribunal LVT.
The freeholder owns the land on which the building is built upon. Also can be referred to as the landlord or lessor.
A rent amount payable for your leasehold being on the freeholders ground. This amount does not contribute towards a service. Your lease will outline how much is payable and by what frequency. The lease will also confirm if your ground rent is subject to a review as time goes on.
Institute of Chartered Accountants in England and Wales
Institute or Residential Property Management
Insurance offers compensation for specified losses. It is therefore vitally important that the relevant insurance policy is in place for either the building or the directors and officers as needed. If you have any queries regarding insurance, we are specialists in being able to determine and arrange great cover for the lowest possible prices.
These are notifications by email or post, which request payment. Invoices/demands have very restrictive legislation boundaries. So, whilst we make every effort to ensure they are clear and concise, they must include certain literature. Please always pay close attention to their noted due dates. Delays in payment harm our ability to manage the property how it should be.
Leasehold Property Enquiries - When you come to sell your property the purchasers solicitor will have an array of questions they will need answering. The managing agent responds to these within a “Leasehold Information Pack”. These are unique to each property and take careful preparation.
A contract which allows you to occupy the property for a set amount of time. Usually known as the “term”, these are typically 99 or 125 years which reduce from their creation. The lease also sets out the obligations of each party and is the principle document to be referred to.
The person(s) whom have the right to occupy the leasehold property for the remainder of the existing term. Also referred to as a tenant or a lessee.
This is a contract which is between the party who has the obligation to fulfil the management covenants and an elected managing agent. The contract will outline mutually agreed terms to ensure the best management possible can occur.
A professional agent is appointed to uphold the management obligations within the Lease contract.
These are pre-determined fees that the managing agent retains for providing their service. Management fees will appear with the service charge budget and will differ from block to block as each one is unique. All our earnings are clearly defined from the outset.
Residential Management Company - Is a non-profit making company that provides an entity to enable owners within a building to undertake management responsibilities. Typically, it is made up of shareholders who also own a property within the block or estate. The RMC will have a Memorandum and Articles of Association which confirms many things from how many directors the company should have and how it should be run.
The Commonhold & Leasehold Reform Act 2002 lets some leasehold flat owners acquire the landlord’s management functions by transfer to a company set up by them- the RTM company.
These are lists of expenditure which make up the budget. Schedules are very useful to help with the apportionments to the overall budget. E.g. An estate may have two blocks. Block A and Block B. Block B has the use of a lift. You would hope to see that the lease allows for a separate schedule to be created so you can include the costs of the lift. Then you only include the leaseholders who have the benefit of the lift in “schedule B”. This therefore safeguards Block A from contributing to an item they do not benefit from.
Section 20 of the Landlord and Tenant act of 1985 was implemented to help safeguard leaseholders against any qualifying major or long term works unnecessarily being undertaken. Section 20 gives clear instructions of how certain works must adhere to a consultation process with Leaseholders and Residential Tenant Associations.
Are monies which are held on fund to service the property. Service charge is neither the Freeholders nor the Leaseholders. Its purpose is to ensure the property can be maintained to a standard which mutually benefits all parties to the lease. A Property Manager will asses the property and review the lease to propose a budget. The budget, in their professional opinion, will be ample enough to cover the costs of managing the building.
The lease will dictate when your property financial year ends. At the end of a financial year we will present all documents to an independent chartered accountant who will certify the sets of accounts. Upon presentation of the certified accounts, it will become clear what the actual expenditure was and if the service charge account has a surplus or deficit attached.
Where the lease calls for them, they are accounts which are separate from the service charge account to help fund future major works. These can either be funded by a year end surplus or, the lease may dictate an item of the budget is to pay towards this account.
All leases are different. In some cases, leases will dictate how to deal with a deficit or surplus. It may be that if the actual expenditure exceeds the budget, you will be sent a separate invoice to make up the shortfall. Or conversely, a credit may be applied to your record for any overpayment.
