By Catherine Affleck, Group Operations Director and Head of Property Management.
Before you enter into investment ownership it is important to know what property management is and why it’s important. How, and who, you choose to manage this is crucial to the proactive life cycle planning for the property and its viability as an investment asset.
The most important aspect of property ownership for landlords is their investment value and income. As such, many of our clients opt to outsource the management of the lease arrangements with their tenants to ensure that the rent is paid in full and on time, that the lease covenants are adhered to and that their tenants maintain their building accordingly. This can be very time consuming, particularly for multi-let sites where service charges may apply and in difficult market conditions or in the event of default, the landlord will need professional advice as to what action can be taken as dictated by law. The retention of a good property manager can prove to be an extremely cost-eﬀective solution across the lifecycle of a lease or investment.
Here are our guidelines to successful property management;
1. Sourcing High- Quality Tenants
Being able to identify red ﬂags comes with experience. Poor quality tenants could lead to dilapidated properties, arrears and potentially hefty legal fees. The ideal tenant will pay rent on time, cause few headaches for you as a landlord and maintain the property to a high standard. It all sounds straightforward, however, sometimes it isn’t so easy. Property managers can process tenant applications and use their expertise to ﬁnd the best possible tenant for you.
2. Legal Compliance
We briefly mentioned legal fees in the previous point however, it is important to understand what legal implications there could be for you as a landlord both on a day-to-day basis and as a result of acrimonious landlord-tenant relationship. Property managers are fully up to date with any of the ever-changing legal responsibilities of landlords, using their expertise to protect clients, ensuring they are not vulnerable to any potential issues. Legal coverage could include;
• Evictions and forfeitures
• Unit inspections
• Lease signing
• Rent and service charge collections and handling
• Tenant screening
• Health & Safety
- Managing Service Charges
For sites with a service charge, property owners are constrained by the terms of the occupational leases which are not always in line with best practice guidance. This can often mean that there is a ﬁne balance between setting service charge budgets at a level which allows for the necessary services to be provided and offers a high standard of service for both occupiers and landlords. It is important to ensure that tenants are happy with the standard of accommodation they are leasing, and that the landlord’s obligations are suitably discharged, whilst guaranteeing that expenditure remains at an affordable level which also provides value for money.
The ability to supply a cost eﬀective service is achieved through a range of means, including utilising our bulk buying power to secure the best possible rates for utilities and service contracts, while also tendering services to include local contractors who may not have the high operating costs of a larger organisation. It is also paramount to ensure that those who are involved in providing professional advice, including our own management services, remain economically competitive whilst providing a best in class service to our landlord and tenant clients.
Running a service charge places several obligations on a landlord in terms of how they deal with the service charge funds. There are usually stipulations within the lease about the way in which the accounts are reconciled and rules and regulations set out by the RICS Professional Statement which is mandatory for RICS Regulated property managers.
4. Lease Events
Lease events should be dealt with in a timely manner to ensure that, particularly where time is of the essence, rent reviews are agreed to allow for any increase in rent to be realised. Managing leases at the end of a term involves ensuring that the tenant has complied with their obligations in yielding up. Whilst it may seem that it is simple as handing keys back, often the lease will allow for recovery of costs via a dilapidations claim to ensure the property is returned to the speciﬁcation outlined in the lease.
Effective management of this process allows property managers to liaise with building surveying and agency departments for dilapidations and reletting to avoid costly repairs and vacancy period.
5. Accurate Pricing
Using a property management company allows you to access up to date transaction data so that you are able to apply the correct rental value to your property. Using carefully and professionally veriﬁed evidence, a property manager is able to provide you with an expertly considered value to ensure your property is let efficiently with minimum vacancy period.
6. Why Property Management is a must
You may assume that you can take on the task of marketing and managing your property effectively - and there is no reason why you cannot, if you have the time and resource to spend. It is, however, essential that you fully understand your legal obligations in order that you can suitably mitigate your risk exposure. A well-managed property is far more likely to provide an optimum return on investment and a good property manager can relieve you of the stress of property ownership.
At Bradley Hall we offer a full range of Property Management services and manage all types of property across a wide range of sectors, from individual residential buy-to-lets to shopping centres and multi-let office and industrial developments. Our approach is bespoke to each instruction depending upon our client’s objectives and circumstances. We provide service charge consultancy advice and ongoing management services to a wide range of landlords, tenants and public sector organisations.
For more information on how Bradley Hall can support you in Property Management matters please contact Catherine Affleck on 0191 232 8080 or click here. To see this article in Portfolio magazine click here.