In recent news, the government are introducing proposals for more leaseholders in England and Wales to buy the freehold of their building. The proposal is set to make this easier. However, what does all this leasehold reform mean? The movement is set to encourage a “fairer housing system”. Opinions from homeowners and those in the industry are being gathered for further discussion.
We break the situation down a bit further and discuss the benefits and implications.
What does Leasehold Reform mean?
In the UK a large number of properties are classified as leaseholds. Shared Ownership, for example, are leasehold properties. With over 202,000 shared ownership properties in the UK, more people are beginning to show interest in having more control of their properties and their maintenance. It is possible for property owners to form their own management company, such as how the GOV.UK website describes in detail.
So should you run your own management company? There are benefits and drawbacks of both options.
What are the benefits running your own management company?
A huge benefit of owning your own management company is having control and the ability to decide what fixes are needed.
By coming together as a management company, owners can also work together to organise quotation. They can source the best prices and agree on the best approach to problems. This collaboration offers the option of getting issues addressed quickly. Everyone is working towards the common good of getting communal issues fixed.
Are there downsides to this?
Forming a management company adopts the assumption that all owners get involved in maintenance. This may not be the case, as other owners may be too busy or simply not want to be involved. This includes timely meetings with contractors, or someone having to be on site when work is being done.
The legal process of forming your own management company can therefore get complicated. There are appropriate process to follow. As explained on GOV.UK, everyone who agrees to participate will have legal responsibilities – so bare this in mind.
What are the benefits of using a professional management company?
The main benefit of using a professional management company it that they take the hassle out of managing your property. If you’re willing to pay for that premium, they complete all the time consuming tasks like sourcing and vetting contractors, as they are likely to already have trusted suppliers.
It also removes the additional stress and concern of owning the management company. This includes managing money and the legal processes associated with running the management company.
What are the downsides?
You’re essentially paying a premium for someone to look after the aspect of maintenance for you. Some property management companies may manage a large number of properties. Therefor, you can face longer waiting times for issues to be fixed.
Communication with a third party such as the contractors can also get difficult. You may be required to be present on the property at short notice.
Final Thoughts
There are benefits of both options. However, it’s positive that the opportunity to manage your own property is available. Using a professional management company may still work best, and it’s entirely up to you and your fellow owners what works best!
