All leasehold properties should have a plan for future major works, according to Principle
One of the UK’s fastest growing property management agencies has highlighted the importance of incorporating a carefully planned future major works programme for clients.
Andrew Winstanley, the property operations manager at Principle Estate Management, explained that being clear on funding was crucial to a properly managed building or estate.
Mr Winstanley, who joined Principle at the start of this year in a move that saw the company’s staff rise to 30, said: “Our vision is property management, properly done.
“The key to managing properties is planning for future major work and being clear on the methods of funding this.
“When we take a building or estate into management we carry out a lease review, which will include finding out if a reserve fund is allowable.
“Subject to the terms of the lease, such reserve funds allow for contributions towards the cost of future major works to be accumulated and spread over a period of time.
“An advantage of this is that it reduces the risk of essential one-off repairs not being carried out or delayed due to lack of funds, and reduces the likelihood of leaseholders receiving large unexpected bills for major repairs.”
Mr Winstanley said that regardless of whether a lease allows for a reserve fund, Principle always recommended to all of its clients that a site-specific, long-term maintenance plan (LTMP) is created for each development, using life cycle costings.
This can include any number of projects required within the lease, but typically will include items such as decoration, roof repairs, fire safety systems and mechanical and electrical equipment.
He said: “The LTMP allows us to make an informed judgement on the adequacy of current funds based on the life cycles for each project and then to communicate our findings to clients and leaseholders.
“The LTMP also allows us to calculate, with reasonable accuracy and logic, how much leaseholders should be contributing to reserve funds where permitted on an annual basis.
“Where the lease doesn’t allow for a reserve fund we may recommend that our clients and leaseholders consider a variation of leases to allow for this, due to the many advantages it can provide.
“If a reserve fund isn’t permitted and a lease variation isn’t an option, we formulate a plan for cyclical maintenance and review the service charge budget accordingly.”
Unless one already exists, Principle aims to create an LTMP within the first 100 days of taking management and openly communicates with clients and leaseholders on the need to do this promptly.
Mr Winstanley added: “Having an LTMP means no surprises, as a reserve fund means no sudden cash-calls, flattens out the annual service charge and means that people moving in and out at different times during major works will pay a more even service charge.
“This also complies with best practice, as recommended by the RICS. Even if not allowed under a lease, some residents will agree to a voluntary reserve to get all of these benefits.”
Anyone interested in finding out more about LTMPs and major works projects can contact Mr Winstanley on 0121 289 4315, or at email@example.com.