J
jon911
Guest
Hi,
I live on a private estate with a few hundred houses. There is a management company set up to handle all the costs of security, landscaping and maintenance etc. Due to the size of the estate we are talking annual fees in the region of £350,000-£400,000 - so substantial funds are at stake, around £60,000 of which, per year, goes into a sinking fund.
The builders set up and own the management company and outsource the 'operational management' of the company to an agent. The fee for this is 15% of the costs taken from the residential fees paid.
I have 2 questions.
1. Is 15% a fair market rate for this service? I do not believe it ever went to 'tender' like the other contracts as the 15% was arbitarily set up at the formation of the company and remained ever since (despite costs rising in the region of 40-50% in the last 10 years).
2. Should the 15% also include the sinking fund, as in my opinion, that is not a cost but a 'cash reserve'.
Would really appreciate a more professional view on the above. If it is deemed to be standard practice then fair enough - but I have struggled to find an equivalent example.
Thanks, Jon.
I live on a private estate with a few hundred houses. There is a management company set up to handle all the costs of security, landscaping and maintenance etc. Due to the size of the estate we are talking annual fees in the region of £350,000-£400,000 - so substantial funds are at stake, around £60,000 of which, per year, goes into a sinking fund.
The builders set up and own the management company and outsource the 'operational management' of the company to an agent. The fee for this is 15% of the costs taken from the residential fees paid.
I have 2 questions.
1. Is 15% a fair market rate for this service? I do not believe it ever went to 'tender' like the other contracts as the 15% was arbitarily set up at the formation of the company and remained ever since (despite costs rising in the region of 40-50% in the last 10 years).
2. Should the 15% also include the sinking fund, as in my opinion, that is not a cost but a 'cash reserve'.
Would really appreciate a more professional view on the above. If it is deemed to be standard practice then fair enough - but I have struggled to find an equivalent example.
Thanks, Jon.