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National Housebuilder Hands Over the Residents Management Company for the Residents to Run
When it comes to any new development, the time will come when the developer / housebuilder hands over the Residents Management Company for the residents to run. This handing over takes place once the development is complete – or after a certain number of the properties have been sold.
You see, every development incorporates common areas on the site and they need to be managed and maintained moving forward. In general, the housebuilder / developer isn’t in the property management business because there are so many complexities and regulations involved in residential property management. This means they don’t tend to have any interest in the ongoing management of the development because they don’t have the knowledge, skills or expertise required to do so.
However, they do have a responsibility to ensure that a Residents Management Company (RMC) is set up and in place, which is usually done during the initial construction phase of the development. During this time, the developer / housebuilder often acts as the Director of the RMC, which gives them control over the initial operations and the ability to appoint a Managing Agent.
Handing Over the RMC
Alternatively, rather than appointing a professional Managing Agent, they may choose to hand over the RMC to the residents, who will each become a members of the RMC anyway, usually in the form of a share in the company when they purchase a property. Members can then volunteer to be Directors of the RMC, taking on a greater level of responsibility for the management of the development. How many Directors there are will depend to some degree on the number of individual homes, but more Directors spreads the burden of responsibility.
In the case of Cherry Tree Gardens in Blackburn, a development of 30 houses, the developer was a National Housebuilder and they elected to hand over the RMC to the residents.
The appeal of buying a new house is understandable. There’s something special about a brand new home where everything in it is shiny and new. From the kitchen to the bathroom, all appliances and everything in between. But being a member of the RMC and having the responsibility that goes with that handed over to you, is something that few of us have the knowledge, skills and expertise to deal with in a professional way. Particularly when you come to realise that the RMC is responsible for managing the common areas, maintaining the development, handling finances, setting service charges, and holding Annual General Meetings (AGM’s), amongst other things.
The RMC On A New Development
Early on, when everything’s new, it’s easy to fall in the trap of thinking that there isn’t very much to do. But common areas will need to be maintained from the outset and understanding the need to establish funds to deal with ongoing maintenance and repairs as the development ages, is paramount.
As a professional managing Agent, I can tell you that one of the reasons we gain new developments to manage is because this requirement to establish funds that deal with ongoing maintenance and repairs - over the long term - is often seriously overlooked. Something that only shows up when a need arises for some maintenance or repairs that involves quite a substantial cost. When this happens, the RMC has to face the fact that they don’t have these funds. The net result being that this substantial, unexpected cost is divided equally between all members, which tends to come as a nasty surprise.
A professional, proactive Managing Agent, like ourselves, will ensure that this kind of thing doesn’t happen.
Back to Cherry Tree Gardens
It only took 6 months for the residents to realise that they needed a professional Managing Agent to deal with all the complexities and regulations involved in residential property management. Including the provision of Sales Management Packs and constantly dealing with solicitors with regards property sales/transfers (this can be very time-consuming, as properties regularly change hands).
We were appointed as managing Agents in April 2024 and the residents no longer have to worry about the day-to-day management of the development. We take care of everything for them and keep them well-informed about what’s happening.
If you’re a member or a Director of a Residents Management Company who’s self-managing your development but are beginning to see the attraction of outsourcing to a professional management company, please do get in touch (use the button below) and take advantage of a free, no obligation consultation. I’d be delighted to explain how it all works and answer any questions you may have.
You might also like a copy of our free eBook, ‘The 6 Topics to Review When Removing a Poor Managing Agent and Appointing a New One’, which you can download by clicking here.
Best wishes,
Paul
Paul Casserly
Casserly Property Management
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