Block Management Costs & Fees: Complete Guide
A comprehensive guide to block management costs and block management fees in the UK. Understand how much block management costs per unit, the different fee structures available, what should be included in your management fee, how to spot hidden costs, and how to compare quotes to ensure you are getting the best value for your building. Whether you are a leaseholder, a director of a resident management company, or a freeholder, this guide covers everything you need to know about average block management fees UK and how to control your block management cost per unit.
How Much Does Block Management Cost?
One of the most common questions asked by leaseholders and directors of resident management companies is how much does block management cost. The answer depends on several factors, but as a general guide, the average block management fees UK range from around 150 to 500 pounds per unit per year for standard residential blocks. For larger, more complex developments with extensive communal facilities, the cost can be higher. The block management cost per unit is influenced by the size of the block, the location, the condition of the building, and the scope of services required from the managing agent.
It is important to distinguish between the management fee itself, which is the charge made by the managing agent for their professional services, and the total service charge that leaseholders pay. The management fee is just one component of the service charge. Other costs such as buildings insurance, communal cleaning, gardening, repairs, utilities, and contributions to a reserve fund make up the remainder. When assessing block management costs, it is therefore essential to look at the management fee in the context of the overall service charge budget.
Smaller blocks of fewer than ten units typically face higher per-unit management fees because the administrative workload does not reduce proportionally with the number of units. A block of six flats requires broadly the same accounting, insurance administration, and compliance work as a block of twenty, but the costs are shared among fewer leaseholders. Conversely, blocks with fifty or more units benefit from significant economies of scale, bringing the block management cost per unit down considerably.
Fee Structures: Per Unit, Percentage, or Fixed Fee
Understanding the different fee structures used by managing agents is critical when comparing block management fees and assessing value for money. The three most common models are per-unit fees, percentage-based fees, and fixed block fees. Each has advantages and disadvantages that leaseholders and directors should consider carefully.
Per-Unit Fee
The per-unit model is the most common fee structure for block management in the UK. The managing agent charges a fixed annual fee for each unit in the block, typically ranging from 150 to 500 pounds depending on the factors outlined above. This model is transparent and easy for leaseholders to understand, as the cost per flat is clearly defined. It also provides cost certainty, since the fee does not change based on the level of service charge expenditure. Per-unit fees are the preferred model for most residential blocks and are the structure most commonly recommended by industry bodies such as ARMA and RICS.
Percentage-Based Fee
Some managing agents charge a percentage of the total service charge budget or total expenditure, typically between eight and fifteen per cent. While this model can be appropriate for complex developments with highly variable spending, it has a significant drawback: it creates an inherent conflict of interest. The higher the service charge expenditure, the higher the management fee. This can undermine leaseholder confidence and make it harder to control block management costs. If your current agent uses a percentage-based model, it is worth considering whether a switch to a per-unit fee would offer better value and greater transparency.
Fixed Block Fee
A fixed block fee is a single annual charge for managing the entire building, regardless of the number of units. This model is less common but is sometimes used for very small blocks of two to four units where a per-unit fee would not adequately cover the managing agent's costs. The fixed block fee provides certainty for both the agent and the leaseholders, but it can be less transparent than a per-unit model because leaseholders may not have a clear sense of what the fee equates to on a per-flat basis. It is important to divide the fixed fee by the number of units to benchmark it against market rates.
What Should Be Included in Block Management Fees?
One of the biggest sources of confusion and dispute around block management costs is what exactly is included in the standard management fee. A reputable managing agent should provide a clear schedule of services that are covered by their fee. At a minimum, the following should be included as standard.
- Collection of service charges and ground rent from all leaseholders, including arrears management and credit control
- Preparation of annual service charge budgets, interim accounts, and certified year-end accounts
- Arrangement and administration of buildings insurance, including claims handling
- Instruction and supervision of contractors for routine maintenance and reactive repairs
- Management of health and safety compliance, including fire risk assessments, asbestos registers, and legionella risk assessments
- Handling leaseholder enquiries, complaints, and correspondence throughout the year
- Administration of the Section 20 consultation process for qualifying works and long-term agreements
- Regular site inspections to assess the condition of the building and communal areas
- Preparation of management information packs for property sales and remortgages
- Company secretarial duties for resident management companies, including filing of annual returns
When evaluating block management fees, always request a detailed breakdown of what is and is not included. An agent quoting a low headline fee may exclude services that others include as standard, resulting in a higher total cost once additional charges are factored in. For a comprehensive overview of what to expect from a professional managing agent, see our block management page.
Hidden Costs and Additional Charges to Watch For
The headline management fee is rarely the full picture when it comes to block management costs. Many managing agents levy additional charges on top of their standard fee, and these extras can significantly increase the overall cost of managing your building. Understanding these hidden costs is essential for making an accurate comparison between agents and for protecting your building's budget.
Insurance Commissions
One of the most significant hidden costs in block management is the commission that some managing agents receive from buildings insurance brokers or insurers. This commission, which can be as high as twenty to thirty per cent of the insurance premium, is paid by the insurer to the managing agent and is ultimately funded by leaseholders through the service charge. Not all agents disclose this commission transparently. Leaseholders should ask their managing agent to confirm whether they receive any commission or benefit from the insurance arrangement and, if so, how much. Agents who operate on a fully transparent basis will disclose all commissions upfront.
Major Works and Section 20 Fees
When a block requires major works, many managing agents charge an additional project management fee, typically calculated as a percentage of the total works cost. This fee, which can range from five to fifteen per cent of the contract value, covers the agent's time in specifying the works, obtaining tenders, managing the contractor, and administering the Section 20 consultation process. While a reasonable fee for managing major works is justifiable, leaseholders should ensure the fee is proportionate and that it is clearly disclosed at the outset of any project. Some agents include basic Section 20 administration within their standard fee, while others charge separately.
Out-of-Hours and Emergency Call-Out Fees
Access to an out-of-hours emergency service is an important part of block management, particularly for blocks with communal heating, lifts, or door-entry systems. However, some agents charge an additional annual fee for providing this service, or levy per-call charges for out-of-hours contact. These fees should be clearly set out in the management agreement and factored into any cost comparison.
Management Pack and Administration Fees
When a leaseholder sells or remortgages their property, the buyer's solicitor will request a management information pack from the managing agent. Many agents charge between 200 and 600 pounds plus VAT for preparing this pack. While this charge is usually borne by the selling leaseholder rather than the service charge, it is an additional cost of block management that leaseholders should be aware of. Other common administration charges include fees for providing references, issuing consent for alterations, and registering new leaseholders after a sale.
If you are concerned about hidden costs in your current management arrangement, reviewing your block management contract is an important first step. Understanding the terms of the contract will help you identify which charges are legitimate and which may warrant challenge or renegotiation.
How to Compare Block Management Quotes
Comparing block management fees from different agents is not as straightforward as choosing the lowest price. A thorough comparison requires you to look beyond the headline fee and assess the total cost of the service, the scope of what is included, the quality of the agent, and the terms of the management contract. Here is a structured approach to comparing quotes effectively.
Prepare a Clear Specification
Before requesting quotes, prepare a specification that sets out the details of your block, including the number of units, the age and condition of the building, communal facilities, current service charge budget, and any specific requirements such as concierge management or estate-wide services. A clear specification ensures that all agents are quoting for the same scope of work, making it much easier to compare like with like. Without a specification, agents may make different assumptions about what is required, leading to quotes that are not directly comparable.
Obtain at Least Three Quotes
Always obtain a minimum of three quotes from managing agents who have experience with blocks of a similar size and type. This gives you a reliable range from which to identify the market rate for your building. When soliciting quotes, ask each agent to provide a full schedule of fees, including both the standard management fee and any additional charges for services such as major works management, insurance placement, and out-of-hours cover. This allows you to calculate the true total cost rather than being misled by a low headline fee.
Assess Quality and Track Record
The cheapest quote is not always the best value. A managing agent who charges a higher fee but delivers excellent service, maintains strong contractor relationships, and keeps the building well-maintained will save leaseholders money in the long run through better procurement, fewer emergency repairs, and higher property values. Check whether the agent is a member of a recognised professional body such as ARMA, RICS, or the Property Institute, and ask for references from other blocks they manage. If you are considering changing agents, our guide on switching managing agent provides a step-by-step process.
Review the Contract Terms
Before appointing a managing agent, review the proposed management contract carefully. Pay particular attention to the notice period for termination, any provisions for annual fee increases, the schedule of additional charges, and the agent's obligations regarding reporting and transparency. A good contract should protect the interests of leaseholders while providing the agent with clear terms for delivering their service. Avoid contracts with excessively long notice periods or automatic renewal clauses that make it difficult to change agent if the service is unsatisfactory.
Getting Value for Money from Your Managing Agent
Paying the right price for block management is important, but value for money is about more than just the fee. A good managing agent should actively save your building money, maintain the property to a high standard, and provide transparent reporting that gives leaseholders confidence in how their service charge money is being spent. Here are the key indicators that your managing agent is delivering genuine value.
- Competitive procurement: the agent regularly tenders contracts for cleaning, gardening, insurance, and maintenance to ensure the building is getting the best price
- Transparent accounting: service charge accounts are prepared on time, clearly presented, and certified by a qualified accountant where required
- Proactive maintenance: the agent identifies and addresses issues before they become expensive problems, through regular inspections and planned maintenance programmes
- Strong arrears management: service charge collection rates are high, and arrears are pursued promptly to protect the building budget
- Clear communication: leaseholders receive regular updates, have access to a dedicated property manager, and can easily raise queries or concerns
- Regulatory compliance: the agent stays on top of changing legislation and ensures the building meets all health and safety, fire safety, and building safety requirements
- Reserve fund planning: the agent advises on appropriate reserve fund contributions based on a planned maintenance schedule, reducing the risk of large unexpected costs
- Professional qualifications: the agent and their staff hold relevant qualifications and are members of recognised professional bodies
If your current managing agent is not delivering on these fundamentals, it may be time to consider a change. Our guide on how to switch managing agent explains the process, including notice requirements, the handover of records, and what to look for in a replacement agent. Getting the right agent in place is the single most effective way to control block management costs while maintaining the quality of your building.
Frequently Asked Questions About Block Management Costs
How much does block management cost per unit in the UK?
The cost of block management in the UK typically ranges from 150 to 500 pounds per unit per year, depending on the size of the block, its location, the range of services required, and the complexity of the building. Smaller blocks with fewer than ten units tend to attract higher per-unit fees because the fixed costs of management, such as accounting, insurance administration, and company secretarial duties, are spread across fewer leaseholders. Larger blocks with fifty or more units often benefit from economies of scale, bringing the per-unit cost down significantly. Location is also a major factor, with blocks in London and the South East generally commanding higher fees than those in the Midlands or the North. The condition of the building, the number of communal facilities, and whether the block has a resident caretaker or concierge all influence the final price.
What is included in a block management fee?
A standard block management fee should cover the core activities required to run a residential block effectively. This typically includes the collection of service charges and ground rent, preparation of annual service charge budgets and year-end accounts, arrangement and administration of buildings insurance, management of routine maintenance and repairs, handling of leaseholder enquiries and complaints, instruction and supervision of contractors, organisation of health and safety compliance such as fire risk assessments and legionella testing, administration of Section 20 consultation procedures for major works, and preparation of management packs for property sales. Some managing agents also include attendance at annual general meetings and regular site inspections within their standard fee, while others charge for these as extras. It is essential to clarify exactly what is included before appointing an agent.
Are block management fees covered by the service charge?
Yes, block management fees are almost always recovered through the service charge. The managing agent charges a fee for their services, and this fee forms one component of the overall service charge budget alongside other costs such as buildings insurance, communal cleaning, gardening, repairs, and contributions to the reserve fund. The management fee is apportioned among leaseholders according to the proportions set out in their leases. This means that leaseholders do not pay the managing agent directly; instead, the fee is collected as part of the regular service charge demand. Because the management fee is part of the service charge, it is subject to the same statutory protections under the Landlord and Tenant Act 1985, including the requirement that costs must be reasonably incurred and that leaseholders can challenge unreasonable fees through the First-tier Tribunal.
Can leaseholders negotiate block management fees?
Leaseholders, particularly through a recognised tenants association or a right to manage company, can and should negotiate block management fees. When a management contract comes up for renewal or when leaseholders are appointing a new managing agent, there is a clear opportunity to negotiate both the level of fees and the scope of services included. The most effective approach is to obtain at least three comparable quotes and use these to benchmark what the market rate is for a block of your size and type. Leaseholders should also negotiate the terms of additional charges, such as fees for Section 20 consultations, insurance commission, and out-of-hours emergency call-outs, as these can add significantly to the overall cost. A well-organised residents association with a clear specification of requirements is in the strongest position to negotiate favourable terms.
How often should block management fees be reviewed?
Block management fees should be reviewed at least every three years, and ideally whenever the management contract comes up for renewal. Regular review ensures that the fees remain competitive and that the level of service being provided justifies the cost. Many management contracts include annual fee increases linked to the Retail Price Index or Consumer Price Index, which provides for modest year-on-year growth without the need for renegotiation. However, a full market review every three to five years is good practice. This involves obtaining fresh quotes from competing managing agents and benchmarking the current fee against the market. Directors of resident management companies and right to manage companies have a fiduciary duty to ensure that the block is getting value for money, and regular fee reviews are an important part of fulfilling that obligation.
What is the difference between a fixed fee and a percentage-based management fee?
A fixed fee is a set annual amount charged per unit or per block for the management of the building, regardless of the level of service charge expenditure. A percentage-based fee, by contrast, is calculated as a proportion of the total service charge budget or total expenditure, typically between eight and fifteen per cent. The key difference is that a fixed fee provides cost certainty for leaseholders, while a percentage-based fee fluctuates with the level of spending on the building. Critics of percentage-based fees argue that they create a perverse incentive for the managing agent to increase expenditure, since higher spending results in a higher fee. Fixed fees are generally preferred by leaseholders because they are transparent and predictable, making it easier to budget and to compare quotes from different agents. However, some agents argue that a percentage fee is justified for complex buildings with high expenditure levels where the workload varies significantly from year to year.
Want to Know What Your Block Should Be Paying?
Whether you are a director looking to benchmark your current block management fees, a leaseholder who wants to understand what you are paying for, or you are considering switching managing agent to get better value, Block is here to help. We provide transparent, competitive block management with no hidden costs. Request a free, no-obligation quote for your building and see how our fees compare.