Shared facilities and communal areas on a new development site will often be under the care of a management company. If you own a property on a new development site, it is likely that you will also be paying some form of annual fee to a management company for their services. But what do they actually do?
A management company’s role is to manage, maintain and repair the communal areas, and to provide services to a development site. Their work will include landscaping, cutting grass and greenery, maintaining play areas, ensuring that the roads and footpaths are in good repair, and ensure that the site is generally kept clean and tidy and in a good condition.
The extent of their obligations will be specific to each development site and will often be set out in the property deeds.
In most cases, the developer will create a management company to serve their new development site. The developer will enter into an agreement with the management company for the provision of their services, and will appoint agents to act on their behalf and carry out all of the services required.
Usually, the agreement will also state that each purchaser of the new build properties on site will become a member of the management company on completion of their plot purchase. They will then appoint an individual to act as director of the management company who will be responsible for ensuring the smooth running of all services and that they are carried out in a good and proper manner.
Property owners on the development site will pay for the costs of the services by way of annual service charge. This will be a proportion of the costs of maintenance, management, repair and all other services provided.
Costs may increase from one year to the next based on the development size, which services are required, and whether any repairs were carried out during the year. Costs must, however, always be reasonable and any increase should appropriately reflect the costs that the management company incurred during the year.
A property owner hoping to sell their new build property may need to get the management company’s consent to sell their property. The management company may have the benefit of a restriction on the property that requires all fees payable by the property owner be paid in full before they consent to the sale.
Property developers can also include restrictive covenants in their property deeds that ban property owners from parking large vehicles, such as caravans, on their driveways. The management companies will ensure that the covenants are complied with and can issue fines to non-compliant property owners. Having such restrictions on the property may also prove problematic in the sale of the property if the prospective purchase is unwilling to enter into the covenant with the management company when taking over the property.
If you need any advice on management companies, please contact a member of our commercial property law team in confidence here or on 02920 829 100 for a free initial call to see how they can help.
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