Why are there property management companies?

It’s a question that many home-owners ask these days and only after you have purchased a property that pays services charges to a property management company, will you really know this answer.

It’s likely that many new build developments circa 2000 to the present day, will have property management companies responsible for the general up keep of the development and this is due to the local council providing planning permission on the condition of a Section 106 Agreement.

This agreement results in owners of leasehold properties such as Flat/Apartment/Coach Houses having to pay a larger service charges, in addition to a charge for ground rent.

Owners of freehold properties would assume that because they are in a freehold property and that they own it out right, that they would not have to pay a service charge… unfortunately they are wrong, because they will have too.

The reason for this is because all properties have to contribute towards to the upkeep of the development, which includes cutting grass, cleaning the private road and other communal areas.  (Services that would normally be the responsibility of the local council)

If you were lucky enough to buy your property as a new-build, you will be familiar with the sales pitch that the developers sales team use.

They will ‘gloss’ over the reality of what the management service charge covers and advise that it’s a nominal fee that covers the maintenance of the development to keep it looking up to scratch.

If this is the first time you have heard about management fees, you will think that it sounds a good idea and the fees are justified.

Unfortunately, only once you have committed to the property and have recognised that the fees you pay are ridiculous, when compared to the services received – will you actually know the answer of ‘Why there are property management companies’.

That is because, you will discover that property management is a licence to print money and benefits the local council, the developer and property management company – but doesn’t benefit YOU the property owner.

There are many property management companies out there, that are only interested in profiteering from the services they are alleged to provide and therefore  we urge caution when purchasing a property that has a management company associated to it.

TTAS are currently campaigning to the Government to regulate this industry and try to prevent local councils from granting Section 106 Agreements, as it is resulting in home-owners being taken advantage of.