Why Flat Management Companies are Not Always Ideal for Managing Community-Wide Property Schemes

A simple, traditional block of flats is usually managed by an ordinary flat management company limited by a small amount of share capital or by guarantee.
From: Osborne Clarke
November 29th, 2012 | 0 Comments

A simple, traditional block of flats is usually managed by an ordinary flat management company limited by a small amount of share capital or by guarantee.

All the directors are usually tenants themselves and the company doesn’t even have to have a formal AGM. Routine tasks such as arranging buildings insurance and any maintenance work are normally carried out by a nominated individual or through a managing agent.

Contrast this with community schemes which need to be managed by either a Community Interest Company (CIC) or a Development Trust (DT).This is because community schemes tend to manage a wider portfolio of community assets such as play areas, community centres and energy centres which require a variety of different skill sets.

Furthermore they normally have an “Asset Lock” which ties all the assets into the management company for an indefinite period. The idea behind this is to prevent any community assets from being sold off or otherwise disposed of at some point in the future. These asset locks are something else that traditional flat management companies are not involved in and probably have no knowledge of.

Whereas flat management companies are run by willing volunteers, community schemes demand so much extra time and expertise that a more professional approach is normally required. The result is that they normally appoint directors who may not be residents but have a particular expertise or are more representative of the wider community interest. This may, for example, involve someone who is connected with a housing association, a nearby school or religious institution.

With regards to particular areas of expertise that may come in useful, it is quite unusual for a community management scheme not to have a professional property manager running it. This is in marked contrast to a flat management company which usually relies on gifted amateurs. The latter would be totally out of their depth when it comes to the management of community buildings and outside areas which calls for specialist knowledge of compliance with health and safety regulations.

Flat management companies normally just have a block of flats and a little bit of garden to look after while community management schemes can have all sorts of assets and events to manage. Very often, there will be organised parties, fetes and firework displays etc which need to be paid for and insured and anyone with first-hand experience of a flat management company will know how unsuitable such restricted bodies are to deal with such matters.

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