Property Factors: Are they worth the money?
As a Glasgow property investor you’ll probably already have a preference with regards to areas and property types. Regardless of your preference, you will more than likely have to deal with Property Factors. Since this is a subject we are asked about a lot, we have listed a few general points to bear in mind.
This is somewhat subjective and depends on the condition and age of the building, quality of the original build and what extra services have been selected - common buildings insurance policy, stair cleaning, gardening and window cleaning are a few extra additions.
Traditional tenements, depending on the factors management fee, generally sit anywhere between £35 - £60 per quarter for a property that doesn’t have a common insurance policy in place. Should it have an insurance policy, you could expect to pay anywhere between £150-250 per quarter, depending on the Factor’s insurance policy pricing and what additional services have been added. Any on-going maintenance will also be added to the bill.
Modern developments are more expensive in general, as although they may not need as much general upkeep on the building fabric (if it has been built well), they have more amenities which require periodic maintenance and servicing such as lifts, security cameras, parking garages, security gates and shutters, sprinklers and common aerials. They will also almost always have a common insurance policy in place as standard.
Depending on the condition of the building fabric, you may have to pay for a replacement roof or repairs, stone repairs, cladding repairs or internal redecoration to name a few. These are the type of works that have a significant cost and must be managed professionally. A factor should arrange for several quotes for this type of work. Depending on the scale and cost, they may appoint a specialist consultant to oversee the works and ensure the scope of works is being followed.
In some City Centre developments (generally with 50+ flats), we have noticed that the ones with a concierge service are more secure and have less issues with crime. They are also generally better kept and seem to have a stronger sense of community. Some modern developments that have not been kept well and don’t have a concierge have ongoing issues with squatters and anti-social behavior.
Pro’s for having a Factor
- They have the legal provision to steer the owners in the right direction
- They are in place to ensure the upkeep of the communal spaces and the safety of the residents
- They will carry out works that may otherwise take months to organise between owners
- Cleaning gutters, stair cleaning, lift maintenance, lighting, roofing repairs, garden upkeep, common insurance policy are all taken care of
- A properly managed development will be worth more than a non-managed development, as years of wear and tear can be seriously detrimental to the capital value of the property
- Quarterly bill detailing all the expenditure in one place
- Value-added service removes the hassle of self-managing this amongst owners
- They will chase non paying owners and will instruct debt collection agencies to pursue any debts
- They are generally up to date with changing regulations and safety matters, such as the current issues with cladding following the Grenfell tragedy
Con’s for having a Factor
- A bad factor can be worse than an owner-managed block, assuming the residents are actively involved.
- If you are not happy with the service provided, you will need a majority approval to switch. This sounds easy, but the more people there are in the development, the harder this becomes.
- If the factor is poor, the cost of the service does not provide value and owners sometimes take on some responsibilities themselves whilst also still paying the Factor.
To summarise, a good factor is worth their weight in gold. They are an impartial voice that should guide the owners in the right direction and will help maintain the capital value of your asset, maintain compliance with ever-changing regulations and ensure that your asset is appropriately insured in line with current values.