Block Management Contracts: What to Look For
A block management contract governs how your building is managed, what you pay, and what your managing agent is obligated to deliver. Understanding the key terms of your management agreement protects your building and your investment.
What Is a Block Management Contract?
A block management contract is the formal agreement between the party responsible for a building's management, typically the freeholder or a residents management company, and the professional managing agent appointed to carry out the day-to-day management of a residential block of flats. This block management agreement is a legally binding document that defines the scope of services, the fee structure, the duration of the appointment, and the obligations of both parties.
The contract serves as the foundation of the relationship between your building and your managing agent. It sets out exactly what services will be provided, how much you will pay in management company fees, what reporting you can expect, and how the agreement can be terminated if the service does not meet your expectations. Without a clear and comprehensive property management agreement, disputes over responsibilities, costs, and service standards are far more likely.
Whether you are a director of a residents management company reviewing your existing arrangements, a freeholder appointing an agent for the first time, or a leaseholder wanting to understand your building's management structure, knowing what should be in your block management contract is essential. For a broader overview of what professional management involves, visit our block management page.
Key Terms to Check in Your Management Agreement
Every block management agreement should address a set of core terms that protect both the building and the managing agent. Whether you are reviewing an existing contract or evaluating a block management contract template, these are the 8 key areas you must check before signing. Understanding what should be included in a management agreement helps you avoid hidden costs and unclear obligations.
Scope of Services
The contract must clearly define every service included within the standard management fee. This should cover service charge administration, building maintenance coordination, compliance management, insurance arrangement, leaseholder communication, and financial reporting. Any services excluded from the standard fee, such as major works project management or tribunal representation, should be listed separately with their additional charges.
Fee Structure and Transparency
All management company fees should be fully itemised. The agreement should state the annual management fee on a per-unit basis, any supplementary charges, and whether the agent receives commissions on insurance placements or contractor invoices. Transparent pricing with no hidden charges is a hallmark of a professional block management contract.
Notice Period and Termination
The termination clause is one of the most important terms in any management agreement. It should specify the notice period required to end the contract, the method of service for the notice, and any conditions that must be met. Understanding how long management contracts last and how to exit is essential before you commit.
Insurance Obligations
The contract should set out how buildings insurance will be sourced, whether the agent receives any commission or referral fee, and how claims will be managed. A reputable managing agent will source insurance competitively through a broker panel and disclose any commission arrangements in full.
Reporting Obligations
Your management agreement should specify the frequency and format of financial reports, management updates, and compliance summaries. Regular reporting keeps directors and leaseholders informed and ensures accountability. At minimum, the contract should require annual certified service charge accounts and quarterly management reports.
Exclusions and Additional Charges
Pay close attention to what is excluded from the standard management fee. Common exclusions include Section 20 consultation fees, tribunal attendance, out-of-hours emergency call-outs, and major works project management. These should be clearly defined so there are no unexpected invoices during the contract term.
Contract Duration and Renewal
The agreement should state the initial contract term and how renewal works. Modern block management terms of business typically specify an initial term of one to two years with automatic annual renewal thereafter. Avoid contracts that lock you in for extended fixed terms without a break clause.
Complaints and Dispute Resolution
A professional management agreement will include a structured complaints procedure and confirm that the managing agent is a member of an approved redress scheme. This gives leaseholders an independent route for resolving disputes if the internal complaints process fails to deliver a satisfactory outcome.
For a detailed breakdown of what professional management should cost, read our guide to block management fees. Understanding fees alongside contract terms gives you the complete picture when evaluating a property management agreement template UK or a live proposal.
Your Managing Agent's Responsibilities Under the Contract
The block management responsibilities set out in your contract define the standard of service your building should receive. A well-drafted block management agreement will hold the managing agent accountable for delivering every service to a professional standard. The following checklist covers the core block management responsibilities that should be explicitly included in any management contract.
If your current contract does not hold the managing agent accountable for these core responsibilities, it may be time to review your arrangements. For a full explanation of what your agent should deliver, see our guide to managing agent responsibilities.
How to Terminate or Change a Management Contract
Understanding how to cancel a property management contract is just as important as understanding what is in it. If your managing agent is underperforming, overcharging, or failing to meet the block management responsibilities set out in the agreement, you have the right to terminate and appoint a replacement. The process depends on the terms of your contract and the management structure of your building.
Serving Notice Under the Contract
The most straightforward route is to serve written notice in accordance with the termination clause of your existing management agreement. Most contracts require between one and three months written notice, sent by recorded delivery to the managing agent registered address. Always check the exact wording of the termination clause, including any conditions around timing or the method of service, before issuing notice.
Right to Manage (RTM)
If the freeholder appoints the managing agent and is unwilling to change, leaseholders can exercise the right to manage under the Commonhold and Leasehold Reform Act 2002. This statutory right allows qualifying leaseholders to take over the management functions of their building without having to prove fault. Once the RTM company is established and the claim is successful, the RTM directors can appoint a new managing agent of their choice.
Section 24 Tribunal Application
Where there is evidence of serious mismanagement, leaseholders can apply to the First-tier Tribunal under Section 24 of the Landlord and Tenant Act 1987 for the appointment of a new manager. This route requires evidence that the current managing agent has failed to meet their obligations, such as neglecting building maintenance, mismanaging service charge funds, or breaching health and safety requirements. The tribunal has the power to appoint a replacement manager directly.
For step-by-step guidance on the switching process, read our dedicated guides to changing your managing agent and switching managing agent. If you are considering the statutory route, our right to manage guide explains the process in full. Should you need to escalate a complaint first, see our advice on block management complaints.
Frequently Asked Questions About Block Management Contracts
What does block management include?
Block management includes a comprehensive range of services designed to keep a residential building safe, well maintained, and financially transparent. Core services typically covered under a block management contract include service charge administration, building maintenance coordination, health and safety compliance, buildings insurance arrangement, Section 20 consultation management, leaseholder communication, and financial reporting. The exact scope of services depends on the terms of the management agreement and the needs of the building. At Block, our contracts clearly itemise every service included so there is no ambiguity about what you are paying for.
What are the responsibilities of a block management company?
The responsibilities of a block management company are set out in the management agreement and typically include preparing and administering the annual service charge budget, collecting leaseholder contributions, managing arrears, coordinating reactive and planned building maintenance, arranging competitive buildings insurance, ensuring compliance with fire safety and health and safety legislation, managing contractor relationships, providing regular financial reports, and acting as the primary point of contact for leaseholders and directors. The managing agent also has a duty of care to act with reasonable skill and diligence in all aspects of the management service.
How long do management contracts last?
Management contracts in the UK typically run for an initial term of one to three years, with provision for automatic renewal on a rolling annual basis unless either party serves written notice to terminate. Some older contracts may specify a fixed term of five years or longer, while modern agreements increasingly favour shorter initial terms with rolling renewal to give both parties flexibility. The length of the contract, the notice period required for termination, and any break clauses should all be clearly stated in the management agreement. Always review the termination clause before signing.
Can residents change the block management company?
Yes, residents can change the block management company, but the route depends on the management structure of the building. If a residents management company or right to manage company holds the management obligation, the directors can terminate the existing management agreement by serving notice in accordance with the contract terms and appoint a new managing agent. If the freeholder appoints the managing agent and refuses to make a change, leaseholders can exercise the right to manage under the Commonhold and Leasehold Reform Act 2002 or apply to the First-tier Tribunal under Section 24 of the Landlord and Tenant Act 1987 for the appointment of a new manager.
What should be included in a management agreement?
A management agreement should include the full scope of services to be provided, a clear fee structure with all charges itemised, the contract duration and renewal terms, the notice period and termination procedure, insurance obligations, reporting and accounting requirements, details of how complaints will be handled, contractor procurement procedures, exclusions or additional charges outside the standard fee, and the obligations of both the managing agent and the appointing party. The agreement should also specify how reserve or sinking funds will be held and administered. A well-drafted management agreement protects both the building and the managing agent by setting clear expectations from the outset.
What is the difference between a block manager and a property manager?
A block manager specialises in the management of residential blocks of flats and multi-unit developments, focusing on communal areas, shared services, service charge administration, and compliance with leasehold legislation. A property manager is a broader term that can refer to anyone managing property, including single let residential units, commercial premises, or mixed portfolios. In practice, block management requires specific expertise in leasehold law, service charge accounting, Section 20 consultation procedures, and building safety compliance that is not typically required in general property management. When appointing a managing agent for a block of flats, it is important to choose a firm with dedicated block management experience.
Need Help Reviewing Your Block Management Contract?
Whether you are reviewing an existing block management agreement, comparing proposals from new agents, or looking to switch managing agent, Block can help. Our contracts are transparent, fair, and designed to protect your building. Call us for a free, no-obligation review.