Baker Estates

Management Company

When buying your new home at one of our developments where shared or communal facilities are included, ongoing management and maintenance of these facilities will be taken care of by a management company to ensure they remain to a high standard.

What is a management company?

A new build management company is the organisation that is set up to finance, maintain, repair and insure the communal areas in a development. This could include roads, footpaths, play parks, green spaces and any landscaping that does not form part of an individual house or is to be adopted by a Local Authority. The company will employ gardeners and other tradespeople to carry out maintenance and repairs on these shared spaces. Their services will be referenced in your property deeds.

Who runs the management company and how is it funded?

The management company is usually created by the developer and will instruct a professional Managing Agent to carry out the Company’s obligations. This can sometimes be before the development is finished but when there are sufficient areas that require regular maintenance. Once the Managing Agent has been appointed, they will contact all homeowners to introduce themselves and outline their role.

In many cases, homeowners become members of the company. Once the developer has completed all their build requirements under Planning, they will pass the control of the Management Company to the homeowners who can become Directors of the Company.

The company is funded by service charges paid by the residents. It is a non-profit organisation and the service charges are the cost of the required maintenance. This annual fee is payable on set dates outlined in your property deeds, usually half yearly in advance. Your first payment is likely to be made to your conveyancer when you buy the property, with future payments being made direct to the management company via the Managing Agent.

How much will I pay a management company?

The average amount payable is £250 per annum. Depending on the size of the development and the facilities provided on the estate, the annual charge might be more or less. Before any properties are sold, we will ask the Managing Agent for a Service Charge budget for the first year. This will be informed to you when you buy your property, and you will be asked to pay a pro-rata amount towards the service charge for the first year. On larger developments, we may take three to four years to complete the construction of the site. That will mean that some of the first owners would have paid their contribution to the service charge of the first year but not in any subsequent year as we would generally not appoint the Managing Agent until there were sufficient areas to maintain. As such, we may incur costs in maintaining the landscaped areas for the benefit of homeowners but has not been able to recover these costs from owners via a service charge in subsequent years. When we are in a position to appoint the Managing Agent we will send them details of the maintenance costs incurred and ask them to reconcile those costs to each homeowner based on their completion date. They will then have prior year accounts made up and certified by a third party accountant.

Once the accounts have been produced, the Managing Agent will be in a position to charge each homeowner their proportion of the maintenance costs from the date you purchased your property, credit the payment you made on completion against that charge and also then bill for the current year ahead via an “in advance” charge. This will ensure that the Managing Agent has sufficient funds available to meet the obligations of the Management Company for the year ahead as well as reimburse the developer for their costs in maintaining the completed areas of the estate prior to appointing the Managing Agent.

The Managing Agent will bill the “in advance” charges based on if the development is fully completed. On an unfinished site, this may be that they are asking for an element of service charge for an item that is not there, for example, a play park. However, it is potentially possible that we may install the play park and ask the Managing Agent to fund the maintenance of the park during the year and so it needs to ensure it has funds available with which to do so. In the event that the play park is not installed during that year, there will be no costs incurred and as such, once the accounts for the year in question are completed, any sums not spent will be credited back to all homeowners.