Factor charges: what to look for

• The management fee

  The obvious one — usually charged per flat, monthly or quarterly. Easy to see, easy to compare.

• Insurance commission — the big one

  Most factors arrange the block's buildings insurance and take a commission on the premium. This is legally required to be disclosed under the Code of Conduct, but it's often buried. For one real building, the insurance commission turned out to be the entire financial case for switching factors — “if you ignore insurance, [the other quote] is considerably cheaper.” One resident spent weeks manually comparing commissions, reinstatement values and inflation cover across three quotes. Check:

  • the commission percentage the factor takes;
  • the reinstatement value — are you over-insured (paying for cover you'll never need) or dangerously under-insured?
  • inflation cover and the excess on the policy.

• Your float / advance payments

  Money you've paid in that sits with the factor for future repairs. It must be held in a separate account. When you leave, it's recoverable — and the outgoing factor must provide the final account position within three months. Buildings routinely have hundreds of pounds per flat sitting there, quietly.

• Contractor mark-ups

  When the factor arranges a repair, do they add a margin or take a commission from the contractor? Often invisible unless you ask for the breakdown.

• The nuisance charges

  Admin fees, debt-recovery charges, fees for copies of documents. Note two limits the Code gives you: a factor generally can't charge you for handling a complaint (unless your deeds specifically allow it), and can't charge interest on a disputed debt while a Tribunal case about it is live.

• What you're entitled to see

  The Code entitles you to an annual account, an insurance breakdown including commission, competitive insurance quotes on request, and a clear explanation of how your share of every cost is calculated. If you ask and don't get it, that itself may be a Code breach.

This is information, not legal advice. Verify with a solicitor for your specific situation.