What is block management?

by | Oct 20, 2022

Home $ Property Management $ What is block management?

Introduction

This article goes over the details of what block management is. From the key services involved to how you can pick the best block management company for your needs as a landlord.

Block management companies are becoming an increasingly more important part of large developments with communal space. 

Neglecting the management of a block of flats can be very harmful to a landlord as they may stray into legal issues and court cases in the future. Especially if there was an accident or claim made against them.

What exactly is block management?

The definition of block management is the managing or maintenance of the communal spaces of residential or mixed-use properties.

Block management is usually done by a block management company but a property management company or property manager can also employ a block management agent to conduct the services required in development on their behalf.

The type of property a block management company manages can range in size quite dramatically. From a small block of flats to a large development with pools, restaurants and even on-site staff.

These shared amenities frequently require specialist knowledge to manage hence why landlords and freeholders choose to outsource this work to a block manager.

A block of flats managed by block management

Different block management companies will therefore specialise in different types of buildings and typically stick with their clients for long periods of time.

For example, a block management company could easily sign a ten-year lease with a freeholder with the leaseholder involved, promising to manage a block of flats and manage their service charge budget for a decade.

In recent years, because of changes to the legislation. A lot of apartment owners are turning to block management companies to reduce the risk involved with managing an apartment block themself.

This is following the event of a long list of new legislation from the government on building safety they cannot keep on top of. For example, the Building Safety Act seen here was recently updated in April 2022.

Key Services In Block Management

The specific services a company chooses for block management are specific to the company and the needs of the leaseholders who should always be the main focus throughout any property management system.

It can be the case that traditional services like cleaning aren’t actually sought after but instead more budget is allocated to things like safety. This should be planned out professionally in a document known as a maintenance plan which involves the leaseholders, freeholders and the block management company all coming to an agreement.

Because of new changes to the law, it is typical to find block management companies hiring specialist block management agents for particular tasks to do with the services in communal areas too. Especially those related to building safety which can ruin a block management company’s finances and reputation if done wrong and there is a lawsuit filed against them.

Service Management

The management of services in a block management company includes the maintenance of things like lawns, lifts, escalators and on large-scale development even gyms and swimming pools.

On apartment complexes without these elaborate services, it could just be cleaning or basic gardening. The maintenance of private roads if they aren’t registered as public roads yet is also a common reason for service management.

Sometimes, services require work from specialist contractors and often, these contractors are available in the event of an emergency.

Tenants can pay a lot for their services, so especially on the highest level where rents are expensive, they can have high standards for working utilities at all times.

Protect property from claims

This side of block management is less simple as it requires specialists to know how to apply the law to the communal areas in the best way without going overboard and spending too much money either.

For example, knowing where to place fire extinguishers and ensuring there is sufficient headroom and disabled access are all requirements to protect a block from potential lawsuits.

Health & Safety Compliance

By law, many don’t acknowledge how stringent the health and safety requirements are for a block of flats. For example, a no-smoking sign in the communal areas of buildings to encourage people to not smoke is required by law. This is written under the 1974 Health and Safety work act you can find using this link.

In addition to this, there also needs to be EICR checks in communal areas which can be done during preventative property maintenance (PPM). The list of tasks to do to follow the mandatory PPM checks can get quite extensive, hence the need for block managers.

Evidently, the law here is extremely challenging to follow.

Regular monitoring

A big part of a block manager’s job is to guarantee to the freeholder that everything is operating as it should. This may take the form of block management companies sending out regular site visits to the properties they manage to investigate if the required services are being provided to the leaseholders.

Block manager taking on responsibility

On top of this, it is the responsibility of the block manager to budget money collected from the service charges paid by the leaseholders. Allocating a certain amount for the provision of services, protection of tenants and also building up a reserve of cash in case there needs to be a large spend of resources for an unexpected property cost.

What makes a good block manager?

Block managers must comply with the terms of the agreement given to them by the freeholder for the benefit of the leaseholder. Block managers work with extremely long timeframes so there are good chances of things not going to plan throughout the agreement and unexpected changes occurring.

In this sense, it is also essential to block managers are fully transparent and proactive in solving problems while also communicating well with the landlord or freeholder of the property. This can be done using a property management app.

For example, new government regulations coming into effect may mean the block manager has to act quickly to bring the right changes into place without going over budget and raising the service charges.

In terms of service charges, a good block manager will also never lower the service charge fees of the property too much either as there needs to be a reserve of cash built up at all times to take care of unexpected costs. 

For example, a block manager who lowers service fees in order to win the popularity of the leaseholders who then encounter a roof leak will have to raise the service charge fees of the property dramatically in order to cover costs.

From this perspective, good block managers are also excellent at constantly readjusting a budget and planning ahead, this also emphasises the need to have good communication. As these changes will have to be transparently shared with leaseholders and private landlords at all times. This includes costs, invoices and new contractor hires for the property.

Finally, a block manager also has to know the property they are working with inside and out and seek out the expertise required to run that property to the best of their ability. For example, a block manager managing a protected building that cannot be developed will have to have strong knowledge in this area of the law.

It is their job to take accountability for the safeguarding of tenants in the building while also protecting the freeholder legally. Furthermore, if their knowledge ever falls short, they must find knowledge from reputable sources or find additional people to advise them.

What Is Residential Block Management?

Residential block managers specifically work with developments used for the housing of people. These types of buildings can still include services similar to those found in commercial buildings such as concierge service and restaurants for the tenants.

A typical type of development with a residential block manager would be a build-to-rent development for example.

A block manager at work making phone calls

Are Block Management Companies Regulated?

Much like property management companies, there is no professional body that regulates block management companies so it is up to the freeholder or landlord to do their due diligence on the competence of a block management company.

Whoever owns the development is in charge of hiring the correct team to manage their building and receive updates as they manage it.

However, once a block management company is hired, there are a series of obligations they have to abide by under the law which protect the freeholder from having responsibility for the leaseholder any longer. Firmly giving responsibility, and liability to the block management company. 

What are block management companies responsible for?

Block management companies are responsible for the leaseholder’s safety together with providing the services they are entitled to which is agreed upon under the leaseholder’s leasehold agreement. 

This is extremely important because it is not as though leaseholders are tenants who can hand in a notice period and leave as easily as if they were brought in by a letting agent. They live there and own the building.

The specifics of their responsibilities consist of taking the service charge from the leaseholder and purchasing the right insurance, providing the correct safety regulations, conducting routine inspections and site visits, staying on top of the law and the budget and finally, protecting the leaseholder from additional fees in an emergency by building up a reserve.

Regarding all responsibilities, if a freeholder doesn’t employ a block management company, this responsibility falls on them and if the freeholder isn’t equipped with the knowledge to deal with all the safety aspects and regulations their apartment block needs, they could cause a lot of problems for themself.

What to look for in Block Management Companies

Ultimately, the easiest way to check for a reliable block management company is to check if they have a good reputation in other places.

On top of this, a block management company should pride itself on doing quality work rather than being the largest company with the most clients. If a management company stretches itself too thin, perhaps in other services like tenant management, the company may not be as qualified in solely block management as they say they are.

Additionally, a company that is transparent with all the expenditures on a property with healthy amounts of communication within their team as well as with the landlord or freeholder is a good sign.

How do block management companies make money?

Block management companies are employed by the freeholder and paid using the service charges paid by the leaseholders of the development. Leaseholders are okay with paying these fees because they benefit from services on the communal grounds of the property. They have to agree to this when they sign a leasehold agreement.

A leaseholder signing a leasehold agreement

Top 5 block management companies

Block management companies need to be reliable, transparent and focused on the quality of their work. So, what are the best block management companies? The below list gives you a sample to find the right company for you.

Block Management UK Ltd

This company is reputable because they are in multiple different sectors of the property ensuring their best experts are in the block management field. Check out their website here.

Prime Property Management

Prime Property Management is a company priding itself on lower costs and creating a smooth, stress-free environment.

Advanced Block Management

Based in Leeds, Advanced Block Management is a company who have been operating for a while. Helping people with their wealth of knowledge. Find them here.

Rowan Block Management

The Rowan Block Management group seen here, is a specialist smaller company that definitely takes on the idea of quality over quantity. Specialising in residential management only.

Haus Block Management

This link takes you to the Haus Block Management page. They’ll tell you that the reason why they’re a leading company is because of their emphasis on communication.

Is a management agent the same as a management company?

No, there is a key difference between the two. A Block management company is a company that will work directly with the freeholder or landlord and the block management agent is employed by the block management company as a specialist to do some of the work and be an expert on the law.

The management company is still responsible for ensuring there are sufficient service charges within the apartment to conduct repairs and to handle important legalities like building insurance. This company employs a management agent when there are difficult technicalities they don’t have knowledge of.

For example, a block management agent may be a specialist in fire safety and work within the development to ensure the building is safe for leaseholders and complies with all the terms of the Building Safety Act.

Are there any block management courses?

There are some great property management courses and block management courses available, some reputable courses on the topic include those from PropertyMark which you can find here.

Alternatively, reading the website here from the Association of Residential Management Agents is a great start to learning more about block management.

      Woman taking a block management course

      What are Leaseholds?

      A leaseholder owns a property built on land owned by the freeholder. This type of property purchase is known as a leasehold. A leaseholder can eventually buy the freehold rights from the freeholder later down the line but this isn’t a requirement and not always an option for the leaseholder.

      When talking about block management companies, it is common to come into contact with the terms leaseholder and freeholder as block management companies often work between the two. Block managers are employed by the freeholder using the revenue generated from the leaseholder paying service charges.

      Does a leasehold mean you own the property?

      Yes and no, a leaseholder is someone or a group of people in a residential or commercial setting who own a property but do not own the land that the building is built on. Whoever owns the land is called the freeholder and as a result, they supply this land to the leaseholders as a shared space which leaseholders will pay a service charge for the maintenance of.

      Conclusion

      Understanding the ingoings and outgoing of block management companies is a hard task. They are an essential group of companies that don’t work on tenant-based management tasks like tenant referencing but instead work on utilising the budget of leaseholders to the best of their ability.

      When deciding on a block management company make sure you take as much information in as you can before making a decision as there are currently no professional bodies that regulate the authenticity of their work.