The Role of a Managing Agent

Often there is some confusion as to exactly who or what a Managing Agent is. Take a look at the diagram below and we hope the role becomes clear.

When a block of flats is constructed or a building converted, each flat will be sold as ‘leasehold’. This means that the purchaser never technically ‘owns’ the flat, rather they just lease it. However, as the lease is often for 999 years, to the buyer it is equivalent to ownership.

The reason flats are sold via a lease is that they fit within an overall building and it has to ‘share’ the property with other flats and therefore various rules and regulations have to be imposed to ensure there is a reasonable chance of harmonious living. As an example, there will be conditions about things such as noise, access and uses to which the flat can be put.

The flat is self-contained and the flat leaseholder will be responsible for all things within the flat, but who is responsible for everything outside the flats? For example, cleaning the stairs, repairing the roof, checking the power supplies? In some blocks of flats, no one has these responsibilities and usually things quickly deteriorate or there are regular conflicts between the flat leaseholders.

Setting up a Management Company

In well run flats a Management Company is established with a remit to manage the overall running of the building. These Management Companies usually have the legal status of a Private Limited Company, a legal entity which has various reporting responsibilities at Companies House, and penalties for non-compliance.

Part of the lease that the flat leaseholder will have signed up to will commit them to being a member of the Management Company, indeed it is only the leaseholders who can become members. To operate the company some of the members need to volunteer to become Directors. In smaller properties all the leaseholders may become Directors, while in larger developments perhaps four or five leaseholders will become Directors, the rest remaining members.

Becoming a Director, in itself, carries various legal responsibilities. Some to do with Companies House reporting, but also other areas such as Health and Safety and adherence to new legislation.

Because the Directorship of a Management Company is usually part time and unpaid, incumbents of the role often struggle to find time to perform the required duties, and therefore appoint a Managing Agent to act on their behalf.

So it is important to remember that a Managing Agent, whilst doing the required ‘leg work’ relating to the building, they are ultimately acting on behalf of the Directors and it is their responsibility to make final decisions, though they may well take technical advice from the Agent.

If you have any questions about the role of a Managing Agent and how it can benefit your leasehold property call us on Bath 01225 874296 or Bristol 0117 379 0050.