Some of the responsibilities of block management firms are clearly visible – tasks such as collecting ground rents and service charges, and managing building maintenance and repairs, for example.
But behind the scenes, block management companies are also responsible for complying with a number of important laws and regulations, from health and safety to data protection, to protect the interests of property owners and residents.
In this blog we take a look at the main legal and regulatory requirements block managers need to navigate.
- Health and safety regulations
The health and safety of residents and their visitors is the top priority for any reputable block management company.
There are several regulations that apply in this area, including the Management of Health and Safety at Work Regulations 1999, which requires all blocks of flats to have a health and safety risk assessment covering communal areas and grounds.
Legislation relating specifically to fire safety includes the Regulatory Reform (Fire Safety) Order 2005, and a range of housing laws that require the person responsible for a block to take steps to prevent fires breaking out in communal areas and to protect escape routes.
- Building and property regulations
To maintain the safety of the blocks they oversee, block management companies must comply with various building and property regulations.
This includes adhering to local building codes, carrying out regular inspections, arranging necessary repairs and maintenance, and complying with planning permission requirements, conservation laws and energy efficiency standards.
- Leasehold legislation
As block management companies typically oversee leasehold properties it is essential they comply with leasehold legislation, including the Commonhold and Leasehold Reform Act 2002 and the Leasehold Reform (Ground Rent) Act 2022.
These cover lease terms, administering lease extensions and variations, dealing with leasehold disputes, right to manage process and the setting of ground rent for new leases.
- Financial management and compliance
Block management companies are responsible for managing service charges paid by leaseholders and for preparing detailed budgets, accounts and financial statements outlining how service charges will be spent.
They must adhere to statutory requirements in handling finances, such as the Landlord and Tenant Act 1985 and the Commonhold and Leasehold Reform Act 2002. These set out the types of costs service charges can cover and the information that must be given to leaseholders when service charges are requested.
Block management companies are also subject to anti-money laundering (AML) regulations to prevent illicit financial activities. They must have robust AML policies and procedures in place, conduct due diligence on clients and report any suspicious activities.
- Data protection and privacy regulations
Block management companies handle and hold personal data relating to landlords, leaseholders, and tenants.
They must comply with the General Data Protection Regulation (GDPR) and ensure they are collecting, processing, storing and handling personal data securely and that the people whose data they are handling know how the information will be used.
Under GDPR, block management companies should also have a procedure in place to enable them to respond to a request from a leaseholder or tenant to see all the information that is held about them.
- Insurance and risk management
Block management companies must have appropriate insurance cover to protect the properties they manage, leaseholders, residents and themselves from potential risks.
This includes public liability insurance, directors’ and officers’ liability insurance, professional indemnity insurance and building insurance. Block management companies must comply with all the regulations applying to these policies and have risk management processes in place to mitigate or minimise potential liabilities.
As well as protecting the interests of property owners and tenants, complying with the regulations and legal requirements described in this article helps block management companies build trust, maintain a good reputation and provide a professional service that ensures the smooth running of the properties they oversee.
