The sensible property manager wants to have a quiet life. He wants happy leaseholders, with no complaints and plenty of money to pay for everything that needs to be done. But how does he get loads of money in the bank – without leaseholders complaining that he’s robbing them blind? On the other hand, how does he pay for those “expensive jobs” without forcing the leaseholders to pay high charges at short notice? And on top of that he has to ensure he’s “reasonable” as required, in part, by Section 19 of the Landlord & Tenant Act 1985.

A lot of managers will take the easy way out, adopt the short-term view and keep the budget in line with last year – whilst praying that the lift doesn’t break down tomorrow. That may work most of the time but one day, inevitably, the lift does break down and everyone living upstairs is shouting down the phone at him, demanding that repairs are completed today, if not earlier! And that’s when the hapless manager notices that there’s less than his pay packet in the client’s bank account. Not a nice position to be in but the short sighted property manager has only himself to blame.

Planning ahead

The sensible manager on the other hand – the one that’s bold enough - takes a deep breath and demands more. But being sensible, he backs up his demands with reasoned argument, facts and figures.

So, where to start? First he takes a good look at the property he’s managing. He makes a thorough list of all “those expensive jobs” that crop up from time to time; exterior decorating, common parts decorating (… and carpets?), lift renewal or refurbishment, roof renewal, upgrade of the entryphone system and – topically at the moment – a digital upgrade of the communal TV system. The list will be different for each property but the principle is the same; what is non day-to-day but will crop up one day?

Once the list is complete the next task is to find out when each item was last dealt with – and how much it cost at that time. That’s normally a bit boring, ploughing through dusty archive boxes and moth eaten files, to find one figure out of hundreds and hundreds.

Then, with ‘reasonableness’ in mind, he undertakes the next most exciting task in the world – reading the lease from cover to cover. If he can manage to stay awake and interpret the legal jargon, he should be able to ascertain what the lease requires for these cyclical works; exterior decorating every five years, roof renewal “when considered necessary”, etc.

Having bored himself senseless with this research it’s time for some fresh air to clear the brain. Time to visit the property, have a good walk round and take a close look at the items on his list. Armed with the history of when each project was last undertaken and with years of experience under his belt, he should be able to make an educated guess about what’s needed for the future and roughly when that money needs to be in the bank.

So let’s get the grey matter working and try to work out what our manager’s worked out, by looking at a couple of examples – exterior decorating for instance. It was last done in 2005 and the cost then, not forgetting the VAT and fees, was £90,599. The lease says that exterior decorating should be carried out “every three years”. Having inspected the property he’s ascertained that there are no new costly considerations to take into account. Allowing for inflation, currently at say 3% per annum, he could reasonably expect the cost in 2008 to be £99,000. He has three years until he needs the money in the bank – so he should be confident in asking the leaseholders to contribute £33,000 to ‘exterior decorating reserves’ in the next financial year.

Topically as I mentioned earlier, the TV aerial system needs upgrading from the existing clapped out analogue system in readiness for the digital world of the future. Our forward-thinking manager has obtained costed proposals from three suitable contractors, following detailed site inspections and discussions about possibilities. The project looks as though it will cost £10,000 … he wants to carry out the works in 2007 and there’s a couple of grand in the kitty so far. ‘TV aerial reserves’ could reasonably be set at £4,000 for the coming year.

Having done the brain numbing research, the breath-taking site survey, and the financial number crunching – now comes the bold part. Our brave manager needs to meet the client directors, or perhaps the assembled masses at a full residents’ meeting, to explain the reasoning behind his – on the face of it – expensive suggestions. He has to outline the overall concept behind his thinking, detail the research and reasoning for each and every figure on his list, and then – often the hardest part – get them to agree that the total at the bottom of the page is acceptable, sensible and ‘reasonable’.

If he’s bold enough he should save himself at lot of hassle in the future – and the respect of his clients and colleagues t’boot.

Bernard Wales FIRPM FioD is Director of Bruton KIFF; www.brutonkiff.co.uk