Knowledge Bank

Any fool can make something complicated, it takes a genius to make it simpler.

Woody Guthrie

Transparent Property Management may not be worthy of Woody Guthrie’s genius status just yet, but we are extremely passionate about his point. For too long some managing agents in the industry have relied upon its customers not having the full understanding of their leases or rights which is something we’re determined to correct.

This section of our site is designed to give bite sized information and empower your understanding on all things freehold and leasehold, transparently.

Knowledge Bank

Glossary

Budgets

Budgets are as good as a property manager will be which can only ever be an informed best guess. Whilst every property manager will exercise their skill and experience to make sure all items included within the budget can be accurately forecasted; actual expenditure at the end of the year can vary slightly due to unforeseen circumstances. E.g a provision in the budget could be for lift repairs. However, the lift may not require any repairs that year. There will therefore be a positive balance for that specific item at the end of the year, financially.

Demised

This term refers to the area which the leaseholder has exclusive rights. E.g, the ground floor leaseholder may have a demised garden which is exclusively their own.

COVENANT

Is another word for agreement but with a stronger legal meaning. A lease will have many covenants which states who has agreed to do what. E.g The freeholder covenants/agrees with the leaseholder they will insure the whole building.

Lease

A contract which allows you to occupy the property for a set amount of time. Usually known as the “term”, these are typically 99 or 125 years which reduce from their creation. The lease also sets out the obligations of each party and is the principle document to be referred to.

IRPM

Institute or Residential Property Management
https://www.irpm.org.uk/public/home

Common Parts

Areas that are undemised (see demised) will be common parts and are enjoyed by everyone. E.g Communal Gardens or Hallways.

Freeholder

The freeholder owns the land on which the building is built upon. Also can be referred to as the landlord or lessor.

ICAEW

Institute of Chartered Accountants in England and Wales
https://www.icaew.com

Deficit / Surplus

See balancing charge

Director

Is a person whom on a voluntary basis, undertakes a very specific role to assist the running of the company who are responsible for it’s management. This is an all encompassing and important role. This link (https://www.lease-advice.org/podcast/becoming-a-director-of-a-resident-management-company-2/) is a useful podcast for further direction and advice.

Invoice / Demand

These are notifications by email or post, which request payment. (If you wish to go paperless please contact us) Invoices/demands have very restrictive legislation boundaries. So, whilst we make every effort to ensure they are clear and concise, they must include certain literature. Please always pay close attention to their noted due dates. Delays in payment harm our ability to manage the property how it should be.

Leaseholder

The person(s) whom have the right to occupy the leasehold property for the remainder of the existing term. Also referred to as a tenant or a lessee.

Schedules

These are lists of expenditure which make up the budget. Schedules are very useful to help with the apportionments to the overall budget. E.g. An estate may have two blocks. Block A and Block B. Block B has the use of a lift. You would hope to see that the lease allows for a separate schedule to be created so you can include the costs of the lift. Then you only include the leaseholders who have the benefit of the lift in “schedule B”. This therefore safeguards Block A from contributing to an item they do not benefit from.

Insurance

Insurance offers compensation for specified losses. It is therefore vitally important that the relevant insurance policy is in place for either the building or the directors and officers as needed. If you have any queries regarding insurance, we are specialists in being able to determine and arrange great cover for the lowest possible prices please contact us.

Ground Rent

A rent amount payable for your leasehold being on the freeholders ground. This amount does not contribute towards a service. Your lease will outline how much is payable and by what frequency. The lease will also confirm if your ground rent is subject to a review as time goes on.

Management Fees

These are pre-determined fees that the managing agent retains for providing their service.  Management fees will appear with the service charge budget and will differ from block to block as each one is unique. At Transparent all our earnings are clearly defined from the outset.

BALANCING CHARGE

All leases are different. In some cases, leases will dictate how to deal with a deficit or surplus. It may be that if the actual expenditure exceeds the budget, you will be sent a separate invoice to make up the shortfall. Or conversely, a credit may be applied to your record for any overpayment.

Management Agent

A professional agent (Such as Transparent Property Management) is appointed to uphold the management obligations within the Lease contract.

Year End Accounts

See service charge financial year

Service Charge

Are monies which are held on fund to service the property. Service charge is neither the Freeholders nor the Leaseholders. Its purpose is to ensure the property can be maintained to a standard which mutually benefits all parties to the lease. A Property Manager will asses the property and review the lease to propose a budget. The budget, in their professional opinion, will be ample enough to cover the costs of managing the building.

Sinking / reserve fund

Where the lease calls for them, they are accounts which are separate from the service charge account to help fund future major works. These can either be funded by a year end surplus or, the lease may dictate an item of the budget is to pay towards this account.

Service charge Financial Year

The lease will dictate when your property financial year ends. At the end of a financial year we will present all documents to an independent chartered accountant who will certify the sets of accounts. Upon presentation of the certified accounts, it will become clear what the actual expenditure was and if the service charge account has a surplus or deficit attached.

Management Contract

This is a contract which is between the party who has the obligation to fulfil the management covenants and an elected managing agent (such as Transparent Property Management). The contract will outline mutually agreed terms to ensure the best management possible can occur.

Section 20 Works

Section 20 of the Landlord and Tenant act of 1985 was implemented to help safeguard leaseholders against any qualifying major or long term works unnecessarily being undertaken. Section 20 gives clear instructions of how certain works must adhere to a consultation process with Leaseholders and Residential Tenant Associations. (see useful links for full details)

Right to Manage Company (RTM)

Right to Manage is a way for qualifying leaseholders to take back control of building management. Once you have successfully obtained Right to Manage status, you as a company then have the right to elect your very own managing agent. For further details please contact us or see useful links.

Leasehold Property Enquiries (LPE1)

When you come to sell your property the purchasers solicitor will have an array of questions they will need answering. The managing agent responds to these within a “Leasehold Information Pack”. These are unique to each property and take careful preparation. Our fee for providing this pack is £200 + VAT and we guarantee to have these responded to within 15 working days. We will help as much as we can additionally to this so that your sale is not delayed.

Residential Management Company (RMC)

Is a non-profit making company that provides an entity to enable owners within a building to undertake management responsibilities. Typically, it is made up of shareholders who also own a property within the block or estate. The RMC will have a Memorandum and Articles of Association which confirms many things from how many directors the company should have and how it should be run.

First Tier Tribunal (property chamber) FTT

Are an independent party who handle applications and appeals relating to disputes over property and land. The FTT replaced the Leasehold Valuation Tribunal LVT.

Knowledge Bank

FAQs

Why do I pay service charge?

The service charge you pay goes into a separate, specific account which is to help maintain the block and estate you live on. A specialised property manager estimates at the beginning of the service charge financial year how much they believe it will cost to effectively manage. This overall amount will then be separated between the leaseholders to pay. The amounts the leaseholders pay will be stipulated within the individual leases. This is credential to make sure the block and estate are safe as well as holding its worth on the market.

How can I go paperless

Just simply email info@transparentpm.co.uk notifying us of your email address and we will help you set up our paperless service

I am selling my flat, what do I need to do?

You will need to appoint a conveyancing solicitor. They will then liaise with us to provide a leasehold property enquiry / leasehold information pack. (see Glossary of terms). Once they are in possession of this, they can tie up all the legal process through to completion.

Do I have to let you know if I am subletting?

Yes. It is imperative we are made aware. Your lease may have a stipulation within it that needs to be referred to. We also may have insurance and safety obligations to comply with. Please contact us so we can help further.

Can I have pets?

Please contact us prior to homing any pets. This is lease specific and we will review and advise accordingly.

Can I alter my property?

Usually, leases will require the Freeholder or Landlords consent. Please contact us with in-depth details of any proposed alteration prior to carrying out the works so that we can ensure you are not going to breach any terms of your lease.

I am struggling to pay, what can I do?

Whilst your lease will call for how payments are to be made, we understand that life happens. Please, please contact us as soon as you feel there may be a problem. We will do all we can to help and achieve a solution. If we know, we may be able to help.

I have a complaint, what can I do?

We strive for absolute customer satisfaction and 100% great service. We also understand that sometimes, things go wrong. And we welcome all feedback as it helps us learn, improve and get better. So please contact us outlining clearly your dispute and we will follow our in house complaints procedure. If in the unlikely circumstance it still is not resolved you can contact the PRS (Property Redress Scheme) quoting our membership number of PRS017228.

How can you guarantee Transparency?

It’s our name sake and means everything to our integrity. Our system lets you access real time data and directors of companies will be able readily receive the blocks bank balances and all invoices at a touch upon request. We are not hiding anything. And rather than make leaseholders serve statutory notices to inspect invoices, we are happy to share them. Just contact us if you have any doubts.

What can I do if I have an emergency outside of your office hours

We have an emergency out of hours service which can be reached by calling our usual phone number 01702 662 455. You will be directed to a partner of ours who will efficiently deal with the emergency and make sure a report is filed with us