Property Management – The Hidden Agenda

Copyright Janet Cameron

If there's any situation more rife with disagreement, conflict and bad behaviour, it must surely be communal flat or apartment living. If you want to see the worst in any of your neighbours, share a roof with them! The chances are the lower flats won't want to pay towards fixing the roof, but they sure as hell will want you to deal with your ground floor rising damp. Neither of you will have a choice, but it's still an opportunity for a confrontation.

Flat or apartment living can be bogged down by misunderstanding and misinformation, sometimes leading to real injustice to some or all of the residents. This can be especially true of conversions, which are likely to have specific problems of maintenance and upkeep that don't always affect purpose-built blocks to the same degree. Another problem is that they are usually composed of smaller numbers of flats and do not enjoy the same professional expertise and control that, in purpose built blocks, can be taken for granted. This can cause serious discomfort, for example, with noisy or disruptive neighbours.

The directors of a building are likely to be composed of a disparate group of people, all with their own agendas. A combination of owners and landlords, all with different objectives and concerns, can produce a recipe for disaster. Throw in an incompetent managing agent and you have all the ingredients for discord and disappointment.

The ideal would be a group of people acting together efficiently for their mutual and equal advantage. Regrettably, the reality is often the reverse.

An Irresponsible Landlord

One case history involves a villa of six flats. The lower-ground floor flat at the rear of the property experienced rising damp problems. Three separate, independent surveys were carried out, each of them reaching the same conclusion, that the damp had been caused by the raising of the floor level in the flat’s small outside patio, as a result of heavy tiles having been laid. The landlord had also failed to maintain the property, to the degree that when the exterior was decorated, certain works could not be completed.

Other residents were outraged to receive an invoice from the managing agent for a contribution towards the rising damp work, a project that he personally had authorised, without reference to the residents. Since the defaulting landlord had also refused to pay his required contribution for recent, necessary exterior decorating, there were insufficient funds in the communal pot to meet this new charge, resulting in the invoices.

This seemed grossly unfair, since most residents were owners on limited incomes, while the defaulting landlord’s property was an investment.

The Managing Agent who Messed Up

The managing agent pointed out that the work had already been done and the contractor was waiting to be paid. Residents were annoyed that the agent had rashly agreed the communal fund would pay for the rising damp, despite the fact that the damning surveys had been carried out over a period of one year, and the problematic patio tiles had never been removed despite several requests.

The agent’s argument was that old houses generally suffered from damp. He was unable - or chose not to see - that if the damp was caused by an addition to the property that was irrelevant to the age of the building. Eventually, the residents had to pay up to reimburse the blameless contractor. Learning from this, a lower ceiling was set on the amount the managing agent could agree with an outside contractor without reference to the residents of the properties.

Payments were made “without prejudice” in the hope the defaulting landlord could be made to sell his property and repay his aggrieved co-directors who were, in effect, financing his investment.

It’s Not Just Accountants who Cook the Books

One landlord proposed a change of accountants. The accountancy firm appointed, he said, was overcharging, and had, one year, charged a sum of £900.00. His accountants could do the job for about half the amount. The managing agent did not dispute his proposals, either through lack of knowledge or indifference.

Other residents were unhappy about the idea of using this person’s accountants, as they were personal business associates, and could not be relied on to be impartial. Inquiries were made and they discovered that the current firm’s £900.00 annual charge was actually levied prior to the appointment of the managing agent, ie. before many duties, for example, secretarial and treasury, were passed over. In addition, the landlord had quoted his own accountancy firm’s estimate without VAT, but when stating the figures for the established firm, he included VAT, making the proposition sound even more attractive.

It was a matter for conjecture what he stood to gain: maybe he had a personal financial interest or would receive a better deal for his own accountancy requirements. Needless to say, the motion to change accountants was not agreed.

Don’t be Manipulated

Sometimes, agents or other directors may try to talk individually to parties who disagree with them about a current issue. This is always unwise. One resident tells how she felt she was being manipulated into feeling morally responsible for something she did not agree with. Another resident was accused of having an “attitude” by the agent. This kind of emotive manipulation must be avoided as far as possible. It is unfair and unprofessional.

To Avoid the Problems of Hidden Agendas:

• Study the contract between owners/landlords and agency. Query anything that sounds as though it might present difficulties.
• No one should be excluded from being invited to directors' meeting because they are awkward of unpleasant. Transparency is essential.
• Insist that minutes are always taken at directors' meeting and circulated to all, including those unable to attend.
• At meetings, if anyone says something you don't understand, ask for an explanation.
• Don't take statements about financial issues on face value. Check it out for yourself.

Most important of all, don’t be afraid to defer judgement and refuse to allow yourself to be bullied. Important decisions need working through. “I want to think about this for a week or two,” is reasonable and allows you time to seek independent, professional advice.

The Leasehold Advisory Service can steer you in the right direction.