Case Study: Grosvenor Waterside
“IT’S THIS ALL-ROUND GREAT SERVICE PROVIDED BY TEAMS OF APPROACHABLE, KNOWLEDGEABLE AND LIKEABLE PEOPLE.”
Sacha Marshall-Ocaña, Director, Grosvenor Waterside Residents Company Ltd
Grosvenor Waterside’s a high-end development situated on the banks of the Thames in Chelsea comprising of over 900 residential apartments, 10 commercial units and its historic dock. The Resident Management Company (RMC), run by a skilled board of 22 directors, made an unprecedented decision to take on the full management function which had previously always been contracted out to firms of managing agents. Read on to find out how our Service Charge team helped the Resident Management Company improve standards of services for leaseholders.
WHY?
To improve standards of services for the leaseholders and reduce running costs.
Gaining and maintaining control of running costs whilst improving standards of services for leaseholders is no easy feat. This was the challenge set by Grosvenor Waterside Residents Company Ltd (GWRC), to which we accepted with aplomb.
SO, HOW DID THEY PLAN TO DELIVER ON THEIR AMBITION?
“When running any business, whether for profit or otherwise as is the case for GWRC, there are always key considerations not to be overlooked. These include People and Technology.” says Sacha.
“In 2019, GWRC took on employment responsibility for all site staff, including their very experienced Estate General Manager, Sacha Marshall-Ocaña, but to implement full management they needed to increase the head count to accommodate the accounting and back-office roles previously provided by their managing agent. This led to the appointment of Kat Zawadzka as Service Charge Manager who’s responsible for daily financial management and reporting, as well as supporting the back-office functions.”
Was GWRC’s decision to take full control of management a success?
Sacha comments, “One of the most important reasons the leaseholders took control of GWRC and in-sourced its management team, was to provide a better service at a lower cost to Service Charge payers. Since GWRC’s been controlled by the lessees, service charges at Grosvenor Waterside have been going down relative to comparable estates but reserves for future capital expenditure have gone up. The average service charge per square foot at Grosvenor Waterside is £7.85 (2023 budget) compared to other comparable London developments at £13.41 per square foot – reserve budgets aren’t included in these figures. We’ve achieved this by disciplined budgeting, tight budgetary control of day-to-day expenditure and developing a long-term capital expenditure plan.
“I’m only too well aware that many of the savings we’ve in fact made since May 2019 have been obscured by other increases, particularly in the provision of necessary capital reserves which hadn’t been made, as they should’ve been, by previous managing agents, exorbitant utility tariffs and insurance costs. It’s nevertheless true that had we not made the savings we have with the Service Charges today, and since May 2019, [they] would’ve been considerably higher.
“A cumulative saving of £1,477,211 on operational costs have been made since May 2019.”
As well as expanding the team at GWRC, there was also a need to purchase and set up the accounting and management software. This would ensure there was a seamless handover of financial information from the former agent and strong controls for the safeguarding of residents’ monies.
Following several meetings, it was agreed that Propman (a well-known software solution in the sector) provided the right fit for GWRC and how the team wanted to work moving forward.
CREATING A NETWORK OF TRUSTED ADVISORS
The GWRC board also recognised that to successfully manage a development of this size and complexity, it would require expert knowledge in specialist areas from time to time, and therefore set out to establish strong partnerships with external professional firms.
In April 2021, a select committee consisting of Sacha, Kat and Finance Director, Michele Forczek, undertook a tender process to appoint the right firm of independent accountants who could meet all the specific accounting needs of GWRC.
What they needed was specialist Service Charge knowledge and experience, but not only that, the appointed firm would need to consider much wider needs that may be required in future to support the team. This included specialist VAT and supplementary tax advice that could be required for their trading company.
After a series of meetings and presentations, TC Group were the chosen partner to take on this role.
Paul Jepps, Partner – Head of Service Charge at TC SEM said, “Our initial work was to ensure the 2021 Service Charge accounts were prepared and signed off ahead of the deadline. The year under review was the final period where the accounting information was predominately controlled by the former managing agent.
“Being the first year of TC Group’s involvement, our work required us to establish an in-depth understanding of the development and undertake a thorough review of all the financial transactions resulting in a number of questions being raised.
“With the detailed knowledge of GWRC, we know the process will be far smoother and more efficient going forward, meaning the accounts will be signed off and issued much sooner.”
A DETAILED REVIEW OF THE CLOSING STATEMENT…
Having successfully completed the 2021 accounts, the team were tasked to review the data received from the former agent covering the period 1 July 2022 through to the management hand over date. The objective being to ensure all entries entered onto Propman were correct and any outstanding queries were addressed promptly to ensure a clean bill of health’s achieved to move forward. A report of findings was produced for the board, and the TC Group team now provide ongoing support to Kat.
Our next job was to prepare the trading company accounts and corporation tax return, ensuring the filing requirements were met. As these accounts have always been controlled by Sacha and Kat, they’re generally more straightforward, however – GWRC did call on the specialist Tax Advisory team at TC Group who provided prompt opinion on the correct treatment of a particular expenditure item. In turn, the accounts were filed on time and the correct tax relief was applied.
£130K OF VAT CREDITS
With GWRC placing every faith in us as their trusted accounting partner and Service Charge advisors, Sacha and Kat reached out for advice on VAT treatment for the commercial units.
TC Group’s Partner and Head of VAT, David McGeachy, undertook a review of the land titles and leases and established that GWRC wouldn’t need to register for VAT, and uncovered in previous years, the treatment adopted was incorrect. This discovery led to VAT credits being applied to the commercial units’ accounts of more than £130k and as important, will save a lot of time and effort for Kat and her team by no longer needing to administer future VAT returns.
APPROACHABLE, KNOWLEDGEABLE – AND LIKEABLE
Paul said, “Whilst the relationship between TC Group and GWRC’s relatively new, due to the collaborative approach and close points of contact between both parties, it feels like we’ve always worked together.
“The team at TC Group love to draw on our many years of experience to offer ideas and provide solutions for all our clients, but this unique opportunity to work closely with the management team at GWRC’s proving to be very rewarding for all involved. We very much look forward to a long-lasting relationship with Sacha, Kat and the board at Grosvenor Waterside.”
Kat and Sacha at GWRC added, “Having undertaken a thorough process to identify the most capable partner to support all the complex financial requirements of our development, we’re confident our decision to recommend TC Group to the GWRC board was 100% the right one.”
“The fact that TC Group has a large team of dedicated Service Charge experts was a major deciding factor but above this, they have complementary services and support teams we can call on whenever we need.
“It’s this all-round great service provided by teams of approachable, knowledgeable and likeable people that assures us that they’ll be a long-term partner for us. We would absolutely recommend them to anyone needing specialist Service Charge support.”
Sacha Marshall-Ocaña, Director, Grosvenor Waterside Residents Company Ltd