The term property management can mean many things, depending on who is using it. For example, a landlord with two buy-to-let flats and a firm with a stake in a commercial office block property are both in the realm of property management, but what this entails in practice is quite different.
This page outlines what property management entails, what different forms it can take, and what property owners need to know about property management in the UK.
What is property management?
The simplest way to define property management is the act of managing a property on behalf of its owner. This can include keeping the property in a good state of repair, keeping it occupied, managing the tenancy and the tenant relationship, managing the property financially, and managing the tenancy.
Sometimes the property owner manages all of these things. Other times, particularly when the owner lives a long distance from the property, or when the owner has numerous properties, or when the owner simply does not want to be involved with the management of the property, a professional property management company is appointed to handle things.
How much work a property manager does is dependent on the type of property, what agreements are in place, and to what extent the property owner desires to pass on.
Management of residential properties
Management of residential properties involves living space, whether houses, flats or even blocks of apartments that are leased to tenants on assured shorthold tenancies or similar agreements.
Most landlords will do initial aid to manage their properties themselves. This help includes finding tenants, collecting rental payments, and even fixing repairs. They may do this until they have reached their target rent or have more than 2 properties.
In cases like this, landlords will usually hire maintenance help like property management or letting agencies to do most of the in-person work like showing the properties or answering questions.
Many letting agencies and property management companies offer a lot of services. These include keeping track of leases, collecting monthly rent, and managing in-person maintenance, and other services.
Management fees across residential properties can range from 8–15% with variations in location and service offered. Letting fees for tenant finding purposes only, tend to charge a one-off fee of one or two weeks' rent.
Management of commercial properties
Management of commercial properties differs from that of residential properties in that it covers offices, retail, industrial, and warehouse spaces, and mixed-use, i.e. business occupied properties.
Although the basics remain the same, that is property maintenance and repair, tenant relationship management, upkeep of the property, and finances, the legal frameworks differ. Leases in commercial properties are typically longer and more complex. The landlord-tenant relationship is also more structured and formal.
Those in the business of managing commercial properties tend to manage larger properties or more valuable assets in significant quantities. Their roles often include rent reviews, lease renewals, service charge management for multi-tenant buildings, and ensuring the property adheres to relevant legislation on energy, fire, and disabled access.
Most individual property owners will engage commercial management as this is typically managed by a chartered surveyor or specialized firm.
Self-managing versus appointing a property manager
Deciding whether or not to self-manage is a matter of personal preference, as either approach has its benefits.
By self-managing, you lower or cut out certain costs and retain control of decision making, keeping you in the loop and eliminating other people's discretion that may conflict with your priorities. However, time spent managing is a factor, especially as the situation becomes more difficult, or with multiple properties that require more of your attention.
A property manager creates time for you, and gives the running of the property to someone whose daily job it is to do so. A property manager who is truly good will give you time and other savings by having contracted vendors, maintenance systems, and knowledge of tenant issues that most individual property owners do not. The cost to you is actual, as is the value of a good, experienced manager.
A 'best of both worlds' situation may be available, and is worth a consideration. Many landlords manage their own tenants but use a letting agent for finding new tenants, or do small attempts at repairs and then use managing agents for maintenance.
What you should expect from a property management company
For residential, as for commercial, there are some things that matter for both.
Accreditation is as good a starting point as any other. Propertymark is for residential, and RICS and ARMA accreditations for block and commercial management are the better ones. Quality is not guaranteed, but it is better than not.
Do they get any complaints? How do they manage complaints? How do they manage tenant requests? How do they respond to questions about complaints? How do they charge tenants? Can they show reviews from clients?
If they don't respond to concerns before you get into a contract with them, do you expect them to be more open with you once they start managing your property?
Block management versus property management
A useful distinction to make is between property management, and block management. Because the boundaries between them can be unclear.
Block management is a subset of property management. It deals with the shared components of a building that houses multiple apartments (flats) — the common parts, building insurance, service charge, freeholder/leaseholder dynamics. It is a separate profession with its own codes of practice and regulation.
If you have a block of flats, you will probably need both — someone overseeing the individual tenancies within the flats, and someone overseeing the building overall. Sometimes the same firm handles both; other times different firms do. Either arrangement can work, as long as the division of responsibilities is clear.