Apartment dwellers should get tough with agents, writes Edel Morgan
MANAGEMENT companies of apartments and housing estates need to crack the whip when it comes to their management agent. This advice comes from a suprising source: a management agent called Core Estate Management, which has issued guidelines on how directors of management companies should treat agents.The message appears to be keep them on a tight rein.
Set up by Alan Drennan and David Ward, the company has been in business for a year and nine months but the duo have years of experience in managing apartments and housing schemes and say a tough pro-active board of directors will often squeeze the best service out of a management agent.
In the normal course, when an apartment or housing development is sold, the freehold should be handed over by the developer to the management company. All of the property owners in a scheme are members of the management company but it is run by a board of directors, mainly made up of residents. The management agent is the company they hire to oversee the efficient running of the development.
In its guidelines Core advises that management agents should be paid a pre-agreed fee, not a percentage of total costs, which encourages them to keep costs high. They say agents should never be allowed grant contracts to service providers or companies they have an interest in and when choosing an agent it's wise to go for one with a track record that isn't overburdened with developments to look after - they say they have a limit of seven developments per manager.
Transparency is key, says Core, and the management company needs to be in control of finances from the outset. All invoices should be submitted to the committee at scheduled meetings, and there should be joint sign-off on cheques so the management company can authorise all expenditure. It's important to ensure the agent has put all contracts out to tender and any large contracts are made by sealed bid tenders.
Watch out for the word "sundries" in the service charge budget as this could be hiding unnecessary expenditure. One trick some management agents use when they're fined for filing late annual returns to the Companies Office is to charge it to the residents under the guise of "sundry" costs.
Core says you need to hire an agent who is up to speed on health and safety legislation, as the management company, and not the agent, will be legally responsible if someone is injured on the premises as a result of negligence. It's also vital they are financially astute - some apartment buildings are over-insured and overvalued and residents are paying for this in their service charge.
Setting yourself up as a "model" management agent is perhaps a risky strategy and leaves Core Estate Management open to criticism if it isn't as ethical or efficient as it claims. But it's refreshing that, in the chaos of an unregulated market, an agent is stepping up to the plate and saying how it should be done. With more people than ever living in managed developments and with the property market in decline, it's important owners are proactive in ensuring their development is being managed well, if only to keep an edge on the competition.
The guidelines also advise apartment owners to insist on a fully costed five and 10-year financial plan. Ideally the board of directors should rotate every two years "to keep it fresh" and the best boards have owners from a range of professions and backgrounds. Easier said than done with people often reluctant to get involved, leaving the same handful of people to do what can be a time-consuming and sometimes thankless job.
Alan Drennan, says Core Estate Management is not trying to appear as "goody goody. Obviously we are in business to make money but it's all about taking the conflict out of the business".
- emorgan@irish-times.ie
