It seems to us that Management Companies are becoming more and more common, and it’s something we are asked to advise clients on regularly. We hope this answers some of the most frequently asked questions.

 

What is a Management Company?

In recent years planning policy here in Northern Ireland has required more and more developers to incorporate open spaces and shared facilities into new residential developments. In most cases, a Management Company will be set up to take ownership of, and responsibility for, these common areas. In most cases, a Managing Agent will be appointed to act on behalf of the Management Company in carrying out its responsibilities, which can include the maintenance and insurance of common areas such as unadopted roadways, parking areas, shared gardens and play areas.

 

Why should I pay my service charge?

Each of the home owners in the development will be a shareholder in the Management Company and will be legally obliged under the covenants in the Transfer Deed from the developer to contribute towards the cost of running the Management Company. These costs will be collected in the form of a service charge.

Your service charge does pay for grass cutting, weeding, and lighting. However, it is important to remember that the Managing Agent is dealing with more than just these visible practicalities! The Service Charge will include all expenses incurred by the Managing Agent in the running of the Management Company such as the Managing Agent’s administration/secretarial fees, accountancy fees, all maintenance fees, bank fees and public liability insurance premiums for the common areas. In an apartment block, the Service Charge will also include maintenance and insurance of any communal hallways, stairwells, lifts and insurance of the apartment building as a whole.

 

What happens if I don’t pay my service charge?

If home owners do not pay their Service Charge it can have dire consequences!

If Managing Agents do not receive the funds from the home owners to cover the costs of running the Management Company they may find themselves in a position where they cannot continue to provide their services. This could result in insurance not being arranged, common areas falling into disrepair and Annual Returns not being filed, which can ultimately result in the Management Company being struck off.

These issues tend to come to the fore and cause particular problems when a home owner decides to sell their property. Many banks and building societies will not be content to lend to a purchaser wishing to buy a property in a development which has common areas or unadopted roads and footpaths, but for which there are no formal management, maintenance or insurance arrangements in place. Indeed, many potential purchasers themselves may be deterred from purchasing the property because of these issues. As a result, the home owner could end up having serious difficulty in getting their property sold – if indeed they are able to get it sold at all!

 

Where do I go for advice?

The Property Department at Murlands deals with these issues on a daily basis. Whether you’re selling or buying, contact us for knowledge and experience you can rely on.