Our block needs a major upgrade, how do we choose the right property manager?
Property Clinic: A professional agent should do the routine tasks in running the development
Perhaps the key way to judge an agent is to get references from existing developments that they manage and then to follow those up. File photograph
I am the director of an owner’s property management company on Dublin’s southside and our complex has almost 100 apartments. The newest apartment block is over 30 years old.
The buildings have reached the stage where they require a lot more maintenance. All the blocks have flat felt roofs which we are replacing with new roofs that will have insulation and a 20-year guarantee – the kind of work that is costly but essential.
We also need to do a major upgrade on the lifts. In addition, we have large grounds around the apartment blocks, and this further adds to the service charge.
Luckily, we do not have large arrears of service charges but because of the age of the buildings I anticipate a considerable amount of work for the next few years.
We need to invite tenders from property managers to manage the complex so I have two main questions.
Firstly, how do we decide which property managers to invite to tender for the work because there are a lot of property managers out there?
I intend to meet the property managers and give them a tour of the property. My second issue is: what questions should I ask the property managers about the services they are offering? In the past, we had problems with managers so we need to pick someone reliable.
You say that your block is now over 30 years old, implying it was built in the 1980s. This would make it older than most Irish apartment developments (mainly built after 2000), but the issues that you identify are the classic issues that many developments will face in the next 10-15 years – a requirement to do either major upgrades to, or replacement of, roofs, lifts and other assets.
This is why the SCSI last year published a report in relation to sinking funds in apartment developments advising all owners’ management companies (OMCs) to prepare long-term Building Investment Fund reports as soon as possible, and then to start putting aside the funds needed for the works identified.
It won’t be long before the many developments built during the 2002-2008 period will be facing the same issues as your own.
In your case, you are looking for a managing agent to manage the development on a day-to-day basis. Note that this will not absolve the directors of the OMC of their responsibilities in terms of overseeing the agent, especially if you have large, non-routine projects coming up.
However, a professional agent should be able to relieve property owners and the OMC board of many of the routine tasks in running the development and assist as regards the big projects ahead.
Managing agents must, by law, be licensed by the Property Services Regulatory Authority (PSRA). The license in relation to the management of multiunit developments is known as the D license and a full list of holders of D licenses can be found on the PSRA website.
In terms of developing a shortlist of agents who you would meet, that obviously to some extent depends on your requirements. Perhaps the key way to judge an agent is to get references from existing developments that they manage and then to follow those up, either by talking to a director of those developments or even by visiting the development to check how it looks.
Preferably, you would like them to be managing developments similar to your own. You could also ask about the finances of those other OMCs with which they work and the level of service charges owing.
As you have major projects coming up, you could also ask the agents to outline specific experience and approaches in relation to the management of major non-routine projects.
You may also wish to ask them whether their property managers are members of any professional organisation as this may increase the chances of their being up-to-date on changing trends in these areas.
In terms of questions for agents, a key one would be the extent to which they work with OMCs as regards preparing for the future. It can be easy to reduce fees in the short-term (eg by cutting back on contributions to the sinking fund) but this is a false economy and is generally not in a block’s long-term interests.
Another question you could ask is whether the agent provides just managing agent services or also provides related services, eg on cleaning, grounds maintenance or other areas.
A wider service offering can sometimes enable synergies but it can also be a source of extra fees for some agents and may require extra vigilance from the board to ensure you are getting “best in class” services in each area.
As in many sectors of the economy, skill shortages are now emerging in relation to qualified property professionals.
Given these constraints, some managing agents are now taking on a limited amount of new work.
As such, you may find that they may be interviewing you as much as you are interviewing them.
Finbar McDonnell, is a chartered property manager and member of the Society of Chartered Surveyors Ireland, scsi.ie