New Build Block Management Guide
A comprehensive guide to new build block management, covering developer handover, snagging management, first year service charge budgets, and common issues with new build management company arrangements. Whether you are buying a flat on a new development or already living in one, this guide explains your rights, what to expect from your managing agent, and how to change management company if the service falls short.
New Build Block Management Explained
New build block management refers to the professional management of communal areas, shared facilities, and building services on newly constructed residential developments. When a developer builds a block of flats or a housing estate, the communal parts of the development need to be managed and maintained from the day the first resident moves in. This includes hallways, lifts, landscaping, car parks, bin stores, lighting, and any shared amenities such as gyms or concierge areas.
The costs of this management are recovered through the service charge that each leaseholder pays, and the obligation to pay is written into the lease before the flat is sold. For buyers, understanding management company fees when buying a flat on a new development is essential. The management fees for new build properties can vary significantly depending on the size and complexity of the development, and it is important to review the estimated service charge budget before committing to a purchase.
Unlike established buildings where management routines are well settled, new builds present unique challenges. The building is untested, defects may emerge during the first few years, the service charge budget is based on estimates rather than actual expenditure, and the managing agent is usually appointed by the developer rather than chosen by the residents. This guide covers each of these issues and explains how leaseholders can protect their interests.
Developer-Appointed Management Companies
On virtually every new build development, the new build management company is appointed by the developer before the first flat is sold. This is a practical necessity because someone needs to be responsible for the communal areas from day one. However, it also means that the initial managing agent is chosen to serve the developer's interests during the build-out phase, not necessarily the interests of the residents who will be paying the management fees for new build services.
Why Developers Choose the Agent
The developer needs a managing agent who will coordinate with their construction team, manage the phased occupation of the building, handle snagging reports, and present the development in the best possible light to prospective buyers. This can create a conflict of interest, as forum users on Reddit have noted when seeking advice on property management companies for new build housing estates. The agent may be reluctant to press the developer on defect rectification if they want to retain the management contract on future developments.
What This Means for Leaseholders
As a leaseholder on a new build, you inherit the managing agent the developer has chosen. You are contractually obliged under your lease to pay the service charge, regardless of whether you would have chosen a different agent. However, you are not stuck with this arrangement permanently. Once the development is complete, leaseholders have the right to change the managing agent through several legal routes, including exercising the Right to Manage.
The Handover Process
The developer handover is one of the most critical stages in the lifecycle of a new build development. It is the process by which the developer transfers responsibility for the communal areas, building fabric, and shared services to the management company or residents' management company. A poorly managed handover can lead to years of problems, including unresolved defects, missing documentation, and disputes over responsibility for repair costs.
What Should Be Handed Over
A proper developer handover should include all building warranties, fire safety documentation, certificates for electrical and gas installations, as-built drawings, operation and maintenance manuals for plant and equipment, landscaping plans, details of all contractors and suppliers, and a schedule of any outstanding snagging items. The managing agent should receive a full set of lease plans, details of every unit sold, and the service charge accounts to date.
Common Handover Problems
In practice, many developers fail to provide a complete handover pack. Missing documentation, incomplete communal areas, and unresolved defects are frequently reported on forums such as Reddit and LandlordZONE, where residents seek advice on holding developers accountable. A competent new build block management company will carry out a thorough inspection of the communal areas at handover, maintain a detailed defects log, and pursue the developer for rectification within the warranty period.
Snagging and Defect Management
Snagging management is a key responsibility for any managing agent on a new build development. Snagging refers to the identification and rectification of defects in the building, both within individual flats and in the communal areas. On new developments, it is normal for defects to emerge during the first one to two years as the building settles and systems are used for the first time.
The Role of the Managing Agent
The managing agent should maintain a comprehensive snagging log for all communal areas and coordinate with the developer to ensure defects are rectified within the warranty period, which is typically two years for general defects under an NHBC or equivalent warranty. The agent should carry out regular inspections, report progress to leaseholders, and escalate unresolved items to the warranty provider if the developer fails to act. Effective snagging management protects leaseholders from inheriting repair costs that should be borne by the developer.
What Leaseholders Should Do
Leaseholders should report any defects in communal areas to their managing agent promptly and in writing. Keeping a photographic record of defects and the dates they were reported is important, particularly if the matter needs to be escalated to the warranty provider. If the developer-appointed managing agent is not pursuing defects effectively, this is one of the strongest reasons to consider changing your managing agent to one with specific experience in new build developments.
First-Year Service Charge Budgets
The first year service charge on a new build is almost always based on the developer's estimate rather than actual expenditure. This is because the building has no operating history. Developers are required to provide an estimated service charge budget as part of the sales process, but these estimates are frequently criticised for being unrealistically low in order to make the flats more attractive to buyers.
Common issues with first year service charge budgets include underestimating insurance costs, failing to account for the full cost of concierge or security services, omitting adequate reserve fund contributions, and underestimating utility costs for communal areas. When the actual costs become clear in the second year, leaseholders can face significant and unexpected increases. For a detailed breakdown of how service charge budgets are constructed, see our service charge guide.
When considering management company fees when buying a flat on a new development, always ask for the full estimated service charge budget, not just the management fee. The management fee is only one component of the total annual cost. Compare the estimate with actual service charges on similar developments in the area to gauge whether the figures are realistic. A good guide on choosing a managing agent will help you assess whether the appointed agent is delivering value for money.
Common Problems with New Build Management
Discussions on Reddit and LandlordZONE consistently highlight a number of recurring problems with new build management company arrangements. Understanding these common issues can help you identify problems early and take action to protect your investment.
High Fees and Poor Transparency
One of the most common complaints is that management fees for new build developments are disproportionately high relative to the services provided. Leaseholders frequently report that they receive little information about how their service charge is spent and find it difficult to obtain itemised accounts. The block management fees guide explains what you should expect to pay and what services should be included.
Slow Defect Rectification
Where the managing agent has a close relationship with the developer, there can be reluctance to push hard on snagging and defect rectification. This leaves residents living with unresolved issues that should be covered by the building warranty. A managing agent that is independent of the developer is better placed to act in the interests of leaseholders.
Poor Communication and Engagement
New build residents often report difficulty contacting their managing agent, slow responses to maintenance requests, and a lack of regular updates on building matters. Good block management requires proactive communication, regular reporting, and genuine engagement with the residents who are paying for the service.
Inadequate Reserve Funds
Some developer-appointed agents set reserve fund contributions too low in the early years to keep the headline service charge down. This stores up problems for the future, as the building ages and major works become necessary without adequate funds to pay for them. A responsible managing agent will set realistic reserve fund contributions from the outset based on a planned maintenance programme.
Changing Your Management Company
If you are unhappy with the developer-appointed managing agent, understanding how to change management company is essential. There are several routes available to leaseholders, and the right approach depends on the ownership structure of your building and the terms of your lease.
- Right to Manage (RTM): Qualifying leaseholders can exercise the statutory Right to Manage under the Commonhold and Leasehold Reform Act 2002, which transfers management control to a resident-led RTM company without needing to prove fault.
- Residents' Management Company (RMC): If the lease provides for a residents' management company, the directors of that company can appoint a new managing agent by serving notice on the existing one.
- First-tier Tribunal appointment: 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 where there has been mismanagement.
- Negotiation with the freeholder: In some cases, leaseholders can persuade the freeholder to replace the current managing agent, particularly where there is evidence of poor performance.
Our detailed guides on the Right to Manage and how to change your managing agent explain each of these routes step by step. If you are on a new build and considering a change, we can help you understand which route is most appropriate for your situation.
Your Rights as a New Build Leaseholder
As a leaseholder on a new build development, you have the same statutory rights as any other residential leaseholder, plus additional protections that come from building warranties and consumer codes. Understanding these rights is the first step to holding your new build management company to account.
Right to Information
You have the right to request a summary of costs and to inspect the invoices and receipts that make up your service charge. The managing agent must provide this information within a reasonable timeframe. This is essential for verifying that the management fees for new build services and the wider service charge are being spent appropriately.
Right to Challenge Charges
If you believe the service charge is unreasonable, you can apply to the First-tier Tribunal (Property Chamber) for a determination. This applies to both the management fee element and any other costs included in the service charge. Our service charge guide explains the process in detail.
Right to Manage
The Right to Manage is a powerful statutory right that allows qualifying leaseholders to take over management of their building without having to prove any fault on the part of the landlord or current managing agent. This is particularly relevant on new builds where the developer-appointed agent may not be delivering value for money.
Building Warranty Protections
New builds are covered by a structural warranty, typically provided by the NHBC, LABC, or a similar provider. This warranty usually covers defects in the building for up to ten years, with the developer directly responsible for the first two years. A proactive managing agent will ensure that all communal area defects are reported and pursued within the warranty period so that rectification costs do not fall on the leaseholders.
Frequently Asked Questions About New Build Block Management
Does a block of flats have to have a management company?
There is no legal requirement that every block of flats must have a professional management company. However, the lease will typically require the freeholder to manage the building and maintain the communal areas, which in practice means either the freeholder manages the block directly or appoints a managing agent to do so on their behalf. On new build developments, the developer almost always appoints a management company before the first units are sold, and this arrangement is written into the leases. Once the development is complete and the developer has sold all the units, leaseholders may have the option to take over management themselves through a residents' management company (RMC) or by exercising the Right to Manage under the Commonhold and Leasehold Reform Act 2002.
Why do new builds have management companies?
New build developments have management companies because the developer needs a structure in place to manage communal areas, shared facilities, and building insurance from the moment the first unit is occupied. The developer typically establishes a management company or appoints a managing agent before sales begin, and the obligation to pay service charges to this company is built into every lease. This ensures that common parts such as hallways, lifts, landscaping, car parks, and bin stores are maintained from day one. The developer often retains control of the management company during the build-out phase so that they can coordinate snagging, defect rectification, and the completion of communal areas. Once all units are sold and the development is complete, management should transition to a company that is accountable to the leaseholders.
What are people's experiences of new build estate management companies?
Experiences vary widely. Common complaints discussed on forums such as Reddit and LandlordZONE include high management fees relative to the services provided, slow response to snagging and defects during the first year, poor communication from the developer-appointed managing agent, lack of transparency over service charge budgets, and difficulty holding the management company accountable before the development is fully handed over. Some leaseholders report that the developer-appointed agent prioritises the developer's interests over those of residents. Positive experiences tend to come from developments where the managing agent is proactive about the handover process, provides clear and itemised service charge budgets, and engages with residents early. Choosing or changing to an experienced block management company that specialises in new build developments can make a significant difference.
How much do management fees cost on new builds?
Management fees on new builds vary depending on the size of the development, the range of communal facilities, and the managing agent appointed. As a general guide, management fees for a new build flat typically range from around 150 to 400 pounds per year for the management fee element alone, with the total service charge (which includes insurance, maintenance, cleaning, landscaping, and reserve fund contributions) often ranging from 1,000 to 3,000 pounds per year or more on developments with extensive shared amenities such as gyms, concierge services, or underground car parks. It is important to distinguish between the management fee, which is the fee paid to the managing agent for their professional services, and the total service charge, which covers all the costs of running the building. When buying a new build flat, always ask for a copy of the estimated service charge budget so you understand the full annual cost.
Can residents change the block management company?
Yes, residents can change the block management company, but the process depends on the ownership and management structure of the building. If the leaseholders collectively own the freehold or control a residents' management company, they can simply serve notice on the current managing agent and appoint a replacement. If the freeholder controls the appointment, leaseholders can exercise the Right to Manage under the Commonhold and Leasehold Reform Act 2002, which allows qualifying leaseholders to take over management of the building without having to prove fault on the part of the current manager. Alternatively, leaseholders can apply to the First-tier Tribunal for the appointment of a new manager under Section 24 of the Landlord and Tenant Act 1987 if they can demonstrate mismanagement. Our guide on how to change managing agent explains each route in detail.
What is the difference between a block manager and a property manager?
A block manager, also known as a managing agent, is responsible for the management of the communal parts of a building or estate on behalf of the freeholder or a residents' management company. Their role includes administering service charges, arranging building insurance, instructing maintenance and repairs to shared areas, ensuring compliance with health and safety regulations, and managing contractors. A property manager, in the broader sense, typically manages individual rental properties on behalf of a landlord, handling tasks such as finding tenants, collecting rent, and dealing with day-to-day tenancy issues. In the context of leasehold flats, the term block manager specifically refers to the management of the building as a whole rather than the individual units within it. When buying a new build flat, the block management company is the one responsible for the shared spaces and the service charge.
Need Help With New Build Block Management?
Whether you are a leaseholder on a new development seeking advice on your first year service charge, a director looking for an experienced new build block management company, or you want to understand how to change management company on your estate, Block Management Company is here to help. Our team has extensive experience managing new build developments and guiding leaseholders through the developer handover process.