Question 1

Can we Pay Ourselves?

Accepted Answer

Q: Our owner-managed building in central London consists of 16 flats and is very actively managed by five (otherwise busy) directors, all of whom live in the building. We reckon that by being so hands-on, our service charge is half of what it would be if we employed a managing agent. However — as the FPRA knows only too well — it's hard work. Though some other residents help with other duties (like sorting out the post and arranging window-cleans), not many people seem to want to get involved, and the directors feel under-appreciated and under-valued. Because of the huge amount of work we undertake, our (new) Chair has suggested the directors should consider paying themselves an honorarium. Clause 82 of our Articles of Association states: 'The directors shall be entitled to such remuneration as the company may by ordinary resolution determine and, unless the resolution provides otherwise, the remuneration shall be deemed to accrue from day to day.' We would like to know how common it is for directors of self-managed buildings to pay themselves? What level of remuneration would be considered fair? And is it an appropriate thing to do? We're not, of course, talking about huge sums of money. However, some directors feel that a modest honorarium would be one way of acknowledging the work they put in every month. I'm afraid these days people rarely say thank you! We assume that any sum paid would be taxable. Any advice you could offer would be greatly appreciated. FPRA Director Shula Rich replies: Some Directors do need to be paid - it's not unusual. You have put the request very reasonably and it should be put to the members in this way. BUT (there always is a 'but', isn't there?) I am concerned that once you pay yourselves your position vis-a-vis the lessees will be different. You're not volunteers any more. People can make demands and have legitimate expectations. You may also need professional insurance. Have you considered employing a surveyor, and accountant, a secretary for the work that you can be relieved of? A secretary in particular could do all your routine work and you could pay him or her. I myself am chair of a block of 100 but I make sure things are done right. I don't do them myself. I took the position on condition that we had a secretary four hours a week, and she receives £11-00 an hour. Perhaps that's an idea too? [submitted January 2016]

Question 2

Can we Pay Ourselves?

Accepted Answer

Q: Our owner-managed building in central London consists of 16 flats and is very actively managed by five (otherwise busy) directors, all of whom live in the building. We reckon that by being so hands-on, our service charge is half of what it would be if we employed a managing agent. However — as the FPRA knows only too well — it's hard work. Though some other residents help with other duties (like sorting out the post and arranging window-cleans), not many people seem to want to get involved, and the directors feel under-appreciated and under-valued. Because of the huge amount of work we undertake, our (new) Chair has suggested the directors should consider paying themselves an honorarium. Clause 82 of our Articles of Association states: 'The directors shall be entitled to such remuneration as the company may by ordinary resolution determine and, unless the resolution provides otherwise, the remuneration shall be deemed to accrue from day to day.' We would like to know how common it is for directors of self-managed buildings to pay themselves? What level of remuneration would be considered fair? And is it an appropriate thing to do? We're not, of course, talking about huge sums of money. However, some directors feel that a modest honorarium would be one way of acknowledging the work they put in every month. I'm afraid these days people rarely say thank you! We assume that any sum paid would be taxable. Any advice you could offer would be greatly appreciated. FPRA Director Shula Rich replies: Some Directors do need to be paid - it's not unusual. You have put the request very reasonably and it should be put to the members in this way. BUT (there always is a 'but', isn't there?) I am concerned that once you pay yourselves your position vis-a-vis the lessees will be different. You're not volunteers any more. People can make demands and have legitimate expectations. You may also need professional insurance. Have you considered employing a surveyor, and accountant, a secretary for the work that you can be relieved of? A secretary in particular could do all your routine work and you could pay him or her. I myself am chair of a block of 100 but I make sure things are done right. I don't do them myself. I took the position on condition that we had a secretary four hours a week, and she receives £11-00 an hour. Perhaps that's an idea too? [submitted January 2016]

Can we Pay Ourselves?

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