Getting best value from your Management Company & Agent

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J_C
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Getting best value from your Management Company & Agent

Postby J_C » Tue May 19, 2009 8:10 pm

May 19th, 2009

Hello,

My name is John Clancy, I am an Owner-Resident at the Grattan Wood development on Hole-in-the-Wall Road. I was the first Owner to become a Director of the Management Company at Grattan Wood, in 2006, and was a Director for three years, before resigning at the end of 2008. Based on my experience, and also my Career as a Management Consultant, I am considering establishing an Independent Consultancy Business to advise (a) Apartment Owners and (b) Management Company Directors, on how to extract best value from both the Management Company and the Managing Agent. With that in mind, I am interested in doing some Market Research amongst Apartment Owners in the Balgriffin / Clongriffin / Donaghmede / Clare Hall / Northern Cross area, to determine if such a Service would be of value to them. SO, IF THIS IS OF INTEREST TO YOU, I WOULD APPRECIATE IF YOU WOULD TAKE A FEW MINUTES TO READ ON -

As an example of the kinds of issues which I have seen in running a Management Company, and based on my experience (a) of inheriting a Management Company from the Developer, when the Developer & his Nominee Directors had resigned, and (b) then dealing with the problems of turning around the Management Company from significant Financial Deficit to Financial Surplus in the following 2 years, I have come to a number of conclusions about Management Companies, and indeed Managing Agents - for example -

* In the early stages of Developments, the Developer has effectvely 'assigned' running of the Management Company to the Managing Agent, and the Managing Agent is in some cases exercising an inapprioriate level of de facto Executive Control over the Management Company - with the result being that the Managing Agent can be resistive to change when the Management Company transfers from the control of the Developer to the control of the Owners. None of which is necessarily in the Owners' best interests, nor that of Residents. Actually, it seems to me that having to run a Management Company is a nuisance for Property Developers, and as soon as the last Apartment is sold, they are very anxious to get rid of that responsibility as quickly as possible - the result being that whilst the Developer IS running the Management Company, the level of detail applied to management of important issues is often not what the Apartments Owners would expect, nor indeed, are really entitled to

* Financial Control of Management Companies is a huge issue, and where Financial Deficits occur from year to year, some Managing Agents (still believing themselves to be the de facto Executive Managers of a Development) seem to take the attitude of "Well, it's no problem, let's just have a big hike in the Service Charges for next year" - whereas when one actually conducts a proper & detailed Financial Analysis, Cost Efficiences can usually be found which can quickly bring the Service Charges under control. Certainly, the level of the Service Charges is a huge issue for many Apartment Owners, but such Owners often do not seem to be getting the level of Financial Control, Financial Transparency, and Value for Money that one would rightly expect from the Management Company

* Tenants moreso than Owner-Residents are the primary source of Disruptive Behaviour within Apartment Developments, with associated negative consequences for Quality of Living for ALL RESIDENTS - eg, Loud Parties, Damage to Campus Infrastructure, Abuse of the Bin Houses, Abuse of the Parking Facilities, Threats of Physicial Violence to other Residents, etc.

* Careless Landlords are often the reason why Disruptive Tenants behave as they do - Had the Landlord (a) bothered to read & understand the Head Lease and the House Rules, (b) properly screened the Tenants BEFORE letting the Apartment to them, (c) ensured that the Tenants clearly understood the House Rules of the Development at the outset of the Tenancy, and (d) ensured that the Tenants complied with the House Rules as the Tenancy progressed, then many instances of Disruptive Behaviour would not happen AT ALL

* Oftentimes, Apartment 'Owners' take the stance - "Well, I paid a lot of money for this Apartment, I own it, and I'll do what I like with it" - and in many such instances, such Owners do not realise that, from a Legal standpoint, they only own a LEASE on the Apartment (albeit very long-term), and that they must comply with the terms of the Head Lease at all times - in fact, in my experience, many Apartment Owners do not realise that they have signed a Head Lease AT ALL. All of which can lead to problems in regard to issues such as Non-Payment of Service Charges, Unauthorised Structural Changes to Apartment Interiors, Noisy Parties, Creation of Fire Hazards (Gas Bottles & Barbeques on Apartment Balconies), etc.

So - THE KEY QUESTION IS - WHAT CAN ONE DO ABOUT THESE ISSUES, AND OTHER KEY ISSUES WHICH ARISE ?

I have seen, first-hand, these issues and indeed many other difficult issues arising many times during my time as a Director of an Apartment Owners' Management Company (AOMC), and based on this experience, I have devised what I believe to be a strong and transparent Management Framework which can deliver significant benefit FOR ALL Stakeholders in Apartment Developments - namely -

* Residents (be they Owners or Tenants)
* Owners
* Management Company
* Managing Agent

And I believe that this Framework can be replicated across other Apartment Developments than just my own, Grattan Wood - with the associated benefits that we now enjoy at Grattan Wood. For example, at Grattan Wood, I inheritied the following situation -

* Service Charges rising significantly from year-to-year, and largely being set by the Managing Agent, with little real transparency as to how the Component Costs were being generated (no disrespect to the Managing Agent - it was simply that the Developer had not required the Agent to extract & present such detail)
* Management Company running at a year-on-year Financial Deficit
* Disrputive Behaviour within the Development was out of control - Loud Parties, Damage to Infrastructure, Abuse of Bin Sheds, Hooliganism, etc., and this was causing significiant year-on-year Costs for the Management Company
* Patrons of a local Sports & Leisure Club were causing significant Hooliganism problems every weekend, and actually, negatively impacting our Property Values, as well as waking up many Residents late at night every weekend
* Lack of Security led to Car Thefts, Bicycle Thefts, Storage of Stolen Cars, Parking by Non-Residents, General Hooliganism, Violence
* The Parking Facilities were being generally abused by a cross-section of both Residents and Visitors
* Common Area Carpets being substantially abused by some Residents, resulting in premature commitment to a Carpet Replacement Programme costing € 40,000
* Perpetrators of damge to Common Area Infrastructure were not being tracked down, and Resultant Costs were driving up the Service Charges
* Apartment Owners in clear & significant breach of the terms of the Head Lease refusing to pay the Resultant Costs arising for the Management Company - which if allowed to stand, would have resulted in ALL OTHER OWNERS having to pay such Costs via Incremental Contribution from their Annual Service Charges
* Corporate Governance issues in regard to the actual proper management of the Management Company not being observed - eg, Developer & Nominee Directors not turning up at AGMs, no Annual Directors' Report, no Financial Analysis of the Audited Accounts, no detailed Cost Breakdown of the Annual Costs, Audited Accounts being submitted by the Managing Agent to the CRO before they had been approved at the AGM, etc.

As a result of the Management Framework put in place after the Management Company transitioned to Owner Control, all of the above problems have now been solved, and Grattan Wood is quoted by a number of Real Estate Agents as being "the most desirable Development in the Locality".

I am interested in meeting any Apartment Owners in the Balgriffin / Clongriffin / Donaghmede/ Clare Hall / Northern Cross area, within the context of a "Focus Research Group", to determine if the establishment of a Consultancy Service for Management Companies on the one side, and Apartment Owners on the other, would be of value to the Apartment Owners' Market. In this context, I would welcome feedback from any Members of this Bulletin Board, and would much appreciate the opportunity to meet with some of you to discuss my Ideas - in this regard, please contact me at -

apartmentadvice@gmail.com

Looking forward to your feedback, and thanks for reading !

Best Regards,

John Clancy.

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