Why do developers impose a management structure? 

When any property developer creates a new development the developer and designers are creating their new dream for that location. I am sure this is why many architects become developers as they can use their skills to create a new persona for a location.

Developments in many ways are all about selling the dream, this is particularly so in residential developments, where you will always have a show house or flat which is immaculately dressed to reflect the style of living being sold to the buyer.

Essentially the prospective buyer is being asked to buy into that dream of living and to visualise themself in that environment. For commercial units this is no different, but more emphasis will be placed on the nature of the common parts and the central services which will be provided to the tenants.

In commercial premises the developer is protecting the sense of community and the type of working environment tenants want to do business in. If the units are being sold off on long leases, then the management obligations will be set out in the leases.

However, if the units are being sold off as freeholds, then the developer may set up a management scheme, which is a set of rules designed to deal with the future management of the development – this may also provide for membership to an Owners Association.

A management scheme is designed to reduce disputes over maintenance and repairs where owners share common property. This can be very useful for a mixed-use development or a development which when completed, will include many units.

What areas will a management agreement cover?

A management agreement can cover every aspect of a development. However, usually the first area considered by the developer is the external appearance of a development and how this should be protected.

I recently saw a row of eight terraces which were all originally painted in white and right in the middle an owner had come in and painted his terrace orange. It looked awful and so out of keeping with the locality. If the developer had put in place a management agreement that would not have happened, or if it did, the developer would be able to attack the change.

What that owner was indirectly saying was, they did not want to be part of what had been created and did not want to conform. The way a building or development looks can be affected by many things and be restricted by a management scheme. For example, the type of windows and the number of window boxes or if there are railings the colour that the railings can be painted and whether bikes can be tethered to them.

Planning or other requirements

If a building is listed or in a conservation area this may be another reason why the developer will impose a management scheme, to ensure that restrictions that are imposed in the planning process are enshrined in the management arrangements and can be policed as part of the everyday management of the development.

These requirements can range from the protection of gable windows to travel plans, which mean that no additional parking can be created or bike schemes and the provision of services for the disabled.

If materials are agreed for certain areas, then there may be restrictions to enforce those restrictions. For example, in a shopping centre development I was instructed on there was a particular issue with pigeons and certain part of the development could only be painted blue to deter the pigeons from messing in those areas, so if part of that area was in the tenant’s demise it could only be painted blue.

In London a lot of the management schemes for the various London estates concentrate on external painting, windows and window boxes and railings to protect the external appearances of the period buildings which at one time dominated the office-letting market in London.

Community creation

In other areas a management scheme is imposed to protect a community that has been set up by the development. I once acted on a development of studio buildings for artists and other creative workshops and the buildings were all designed as individual workshops. The buildings were part of a beautiful concept for artists to grow and develop, with an inner wellbeing courtyard for relaxation.

The management scheme protected this and gave each owner the right to participate in the management via membership to an owners association.

More recently I acted on a community development trust, where the community development company was set up pursuant to the original section 106 agreement and obliged the developer to set up the owners association as there was to be more than 400 units in the completed development. The completed development is run as an integrated estate with rules for each type of property on the development.

Conclusion

Every development will have its own considerations, Newmanor Law has development solicitors who are experienced in dealing with all your development issues and can advise at every stage. Whether it is imposing a management structure or designing your sale lease we are here to guide you and be part of your development team.