3 questions every block manager must answer
Most questions put to a managing agent are easy to answer well and tell you nothing. “Do you carry out inspections?” will always get a yes. Three questions are harder, and the quality of the answer — or the speed with which it arrives — tells you most of what you need to know about how a block is being run.
1. Which account is our money in, and what is the balance this morning?
Under section 42 of the Landlord and Tenant Act 1987, service charge contributions are held on statutory trust for the leaseholders who paid them. The money is not the landlord’s and it is not the agent’s. It belongs to the building.
So the question has a right answer, and it is specific: a designated client account for this building, held separately from the agent’s own money and from every other block they manage, with the reserve identifiable as a reserve rather than blended into general funds, and membership of a client money protection scheme.
What to listen for in a bad answer: vagueness about whether the account is per-building or pooled, an inability to give a balance without “checking with accounts”, or a year-end pack being offered in place of a current figure. A well-run block can answer this in the time it takes to open a portal. Our clients see budget against actual, reserve balances and arrears themselves rather than asking.
Follow-up worth asking: what happens to the interest, and who gets it? The lease usually answers that, and it is a question that separates agents who have read the lease from agents who have filed it.
2. What are we not compliant on right now?
Note the wording. Not “are we compliant”, which invites a yes, but what is outstanding today. On a real building the honest answer is almost never “nothing”, and an agent who says nothing is either exceptional or has not looked.
The compliance record in a residential block usually runs to something like:
Fire risk assessment — and, more importantly, the remedial actions arising from it. A current FRA with a schedule of actions nobody has priced or programmed is not compliance, it is a list of known defects.
Fixed wiring on the landlord’s supply — an EICR on the common parts, commonly on a five-year cycle, with any C1 and C2 items actually closed out.
Lifts — thorough examination under LOLER at six-monthly intervals where the lift carries people, alongside the maintenance contract, which is a different thing.
Water hygiene — a legionella risk assessment kept under review, with the monitoring regime it recommends actually being run.
Asbestos — the duty to manage applies to the common parts of buildings constructed before 2000, which covers a great deal of converted stock.
Higher-risk buildings — registration, the safety case report, mandatory occurrence reporting and a resident engagement strategy. Those duties sit with the accountable person, normally the freeholder or the RTM company. An agent does the work; the duty cannot be contracted away.
The answer you want is a register with dates, owners and next-due columns, and a candid line about what is behind. The answer that should worry you is a folder of certificates with no action tracker, because certificates record that someone looked, not that anything was fixed.
3. What is this building going to cost over the next five years, and where is that money coming from?
This is the question almost nobody asks, and it is the one that determines whether leaseholders get a bill they can absorb or one they cannot.
Buildings consume themselves on a schedule. Roof coverings, external decoration, lift cars and controllers, boilers, communal doors, intercoms and fire alarm panels all have a working life, and every one of them ends. A managing agent who can tell you which of those falls due inside five years, roughly what it costs, and what the reserve fund will hold by then, is managing the building. One who cannot is administering it.
The consequence of getting it wrong is concrete. Section 20 consultation is triggered once any single leaseholder’s share of qualifying works exceeds £250 — a threshold set in 2003 and never uprated — and consult badly and recovery is capped at that figure unless the tribunal grants dispensation. Meanwhile a building with no reserve meets a £180,000 roof with a one-off demand, which is where arrears, disputes and applications to the tribunal come from. Our guide to section 20 consultation sets out the stages.
Ask to see the planned maintenance schedule and the reserve fund projection against it. If those two documents do not exist, that is the answer.
Why these three
Each question is hard to answer well without actually doing the work, and none can be passed with a reassuring tone. Money held properly and visibly, compliance tracked as actions rather than certificates, and a costed view of the next five years are the three things that separate a building that is being managed from one that is being invoiced.
If you are weighing up an agent, how to choose a managing agent covers the rest of the questions, and transferring your block sets out what a proper handover looks like. Or get in touch and put the three questions to us.