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Block management firms struggling to make profits B lock management companies’ portfolios have grown in the past year – but firms are struggling to turn the increase into more The relationship between the use of specialist block management software and the number of buildings managed per Property Manager*
revenue or profits, a new study shows. And the report says that 70% of companies are missing out on a massive £2.6bn opportunity to expand into the fast-growing build-to-rent sector. The findings are revealed in The Fixflo Leasehold and Block Management Market Report 2019, which polled 170 block management companies. It found that almost two-fifths of those companies achieved a staggering growth of 35% in the number of leasehold units they manage. More than a third of those who responded said they had seen their portfolio by as much as 40%. But the report – which was supported by ARMA, MRI Software, News on the Block and Flat Living – states that the growth in the units being managed had failed to translate into extra revenue or profits. Pointing to ARMA’s Overview of the Residential Block Property Management Sector in England and Wales 2019 report, it highlights that: • Firms with a turnover less than £500,000 has seen an average loss of 12.5%. • Those with turnovers topping £500,000 saw profits rise by just 6.8%. • Block management firms that hadn’t invested in specialist software (3% of respondents) saw their portfolios shrink. Missing out on build-to-rent The study also reveals that the majority of block management companies that responded have failed to expand into the growing build-to-rent sector. Almost 70% have yet to enter the sector, of those which have, the majority manage fewer than 100 build-to-rent units, while a meagre 3% has more than 1,000 build-to-rent units under their management. A Fixflo spokesman said: “Data published by Savills in June 2019 showed that investment in build-to-rent schemes reached £2.6bn in 2018 – an 11% increase than that in 2017 and the highest level of investment since 2014. “Block management companies, with their wealth of property management experience, are well positioned to enter this expanding market. Why is our sector slow to respond to the growing demand?”
Not using any specialist block management software solution Using 1 specialist block management software solution Using more than 1 specialist block management software solution
Number of Buildings Managed Per Property Manager
Companies using specialist block management software solution Companies NOT using specialist block management software solution
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