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Minimising the Impact of Major Work

1024 686 Realty Law

Minimising the Impact of Major Work

Whilst all managing agents and landlords appreciate that major works are necessary to preserve the integrity and value of the building, it is nevertheless almost inevitable that the announcement of a major works program will cause complaints from leaseholders, non-payment and challenges to the validity of the process.

There are a number of simple practical steps which you can take to minimise the impact on leaseholders which will, in turn, make the process far easier to manage.

Firstly, and this is particularly important where you have been in control of a building for a number of years, try to plan in advance. This would involve having a rolling maintenance program and being aware of any major works which will be necessary within the next 3 to 5 year period. If you are able to plan well in advance of any works taking place, this minimises the impact on leaseholders as they have adequate time in which to make financial arrangements or save the necessary funds.

If plans can be put in place several years in advance, with a rough estimate of costs this will avoid many dramas that can arise. Obviously, if you have only just taken management of a building this may not be possible if there is a need for more immediate works but, in considering whether a building is a good and profitable risk to manage or buy, the ability to plan ahead and the overall state of the property are important factors to consider. It’s a sad fact that many leaseholders will prefer to live in a building which has been neglected for some years rather than having to fund unanticipated major works imposed by a new landlord or managing agent.

It is helpful if, in addition to the Notice of Intention to carry out major works, you can also give a breakdown of the anticipated cost and how such cost is made up. There are frequent challenges to the reasonableness of major works charges and if this can be diverted by providing details of how the costs are made up at an early stage in the process then this may ease the process considerably.

If possible, and the payments from leaseholders are not required immediately to progress the works, a staged payment plan may go some way to minimising the risk of non-payment. The longer the period over which the leaseholders can make payment then the better disposed they will be to the major works process and if it is possible to stage payments over a 6, 12 or 24 month period this should be considered. Do check that the lease permits this prior to entering into any such agreement.

It may be that a sinking fund is available and can be utilised for the major works project. If this is the case then leaseholders should be notified of this fact and the amount available which can be applied towards the major works.

One further step that can be taken, which is fairly obvious, but often overlooked, is to have regular meetings with leaseholders. Be prepared to give an up-date as to progress and funding and to answer any questions that may arise. If the leaseholders feel that their opinions are being taken into account at each stage of the process and that any concerns are addressed as they arise this builds significant goodwill towards the project as a whole.

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