The management contract: flat fee, extra services and fees to watch

The advertised fee is almost never what the building actually pays. The difference hides in the extras.

Two managers quote a similar annual fee, yet one costs the building 30% more. The explanation rarely lies in the fee itself: it lies in everything outside it — the chargeable extras, whose volume depends directly on how the building is run.

Reviewing the management contract is one of the board’s most profitable tasks. It needs no legal expertise: only method, and access to the last few years of invoices.

What the standard fee covers

Management contracts follow a standard model: a list of routine tasks paid through an annual fee, and beside it a closed list of extras that can be billed on top. Anything inside routine management cannot be re-billed, however much time it takes.

• Bookkeeping, charge calls, bank account management.
• Convening and holding the annual general meeting, drafting and serving the minutes.
• Routine handling of maintenance contracts and simple claims.
• Making documents available and dealing with the board.
• Archiving and passing on mandatory records.

The extras that inflate the bill

The headings that really separate one manager from another are few, and recur year after year:

• Extra meetings and board meetings beyond an agreed number.
• Works supervision, billed as a percentage of the works — by far the heaviest item.
• Arrears handling and recovery steps.
• Sale documents and settlement statements.
• Copies, recorded post, travel, hourly attendance.

The works percentage deserves particular attention: on a façade job it can run into thousands. See how to prepare a façade renovation and build those fees into the budget from the start.

The method: start from invoices, not the contract

Comparing two contracts on paper achieves little. The right method is to take the last three years, add everything the manager billed — fee plus extras — and divide by the number of units.

That figure is comparable across managers. It often shows the "cheapest" one was not. Same reasoning as comparing works quotes: the advertised price is not the price paid.

Competitive tendering

The board is expected to put the management contract out to tender at regular intervals and present the offers to the meeting. The task is often skipped, because it takes time and feels like a vote of no confidence in the incumbent.

It is not: tendering is not changing manager. It checks the market price, and often leads to renegotiating with the current provider. If a change is warranted, the procedure is set out in changing your property manager.

Clauses to read closely

• Term: a long contract locks conditions in; a short one forces frequent tendering.
• Termination conditions and notice period.
• Hourly attendance rates and the threshold beyond which they apply.
• The list of chargeable extras and their unit prices, line by line.
• The board’s access to accounting records — difficult access makes any review illusory.

That last point conditions the board’s whole oversight role: see how to check the accounts and which documents the board can obtain.

A manager’s real cost is not in the headline fee, but in the total billed over three years.

Keep the history with CoproHarmony

CoproHarmony lets the board archive contracts, offers received and invoices year after year, and find instantly what was billed and when. Create your free space.

If the review reveals repeated failures, see removing the manager mid-term.