In Ireland, the US and the UK, 80% of community associations are underfunded and battling legacy infrastructure issues as well as uncollected service charges, significantly impacting on their viability. Irish start-up Block Angel has the solution.
Property ownership is a complicated business and it gets worse when service charges aren’t being collected and that is mostly because people don’t know what they are paying for.
A sinking fund crisis allied with ageing stock, legacy defects and fire safety issues, signal an imminent perfect storm.
“If you know the seriousness of not acting and instead can act today, the financial health and safety of the community can be improved”
Into the fray comes an Irish start-up business called Block Angel, a residential block management software that aims to solve the financial crisis in service charges by addressing the issues associated with non-payment.
Block Angel founder and CEO Andrew Farrell is taking a modern, cloud-based approach to the communications issues between management agents, property owners, tenants and community associations.
It does so by providing insight into the finances of the management company and how property service charges are spent. As a result, property owners can engage with management, raise issues, receive updates, view important documents and arrange their payments.
Block Angel’s payment gateway provides property owners with options on payment methods and payment arrangements in a quick and simple collection experience. This also greatly simplifies the payment collection and reconciliation process for property agents.
“This payment gateway experience is proven to increase payment acceptance by 10% which will have the effect of cutting service charge arrears by half. In Ireland approx. €60m of service charges go uncollected each year, the same figure in the UK is approx. £1.3bn and over $20bn each year in the US. Uncollected service charges cost those who do pay their service charges a 20% premium so it is in the interest of all to continually improve collections,” Farrell explained.
Block Angel founder Farrell has a background in surveying and worked in property management in Ireland and Australia as well as hotel brokerage.
“When I was working in Melbourne, I saw first-hand how really hard property managers have to work in terms of communications, managing building issues, payments and more, and it’s pretty intense.”
An idea took hold about how much easier this could be done through software that provided a communications system that would help not only property management agents but also residents who lived in these buildings.
He joined the New Frontiers programme and got to work on a minimal viable product (MVP) subsequently and spent two years building, testing and iterating the software product. With the backing of angel investors, the product was released to the public earlier this summer.
Communication is key
His aim is that the technology will form a bridge between property owners, residents and the agents and community associations. “From our research less than half of people pay their service charges on time and 20% don’t pay their service charges at all. In these instances, many are reluctant to pay their service charges because they don’t understand what they are paying for.”
Another issue is the collection methods are no longer relevant or appropriate. “The process of collecting service charges has largely gone unchanged for decades with agents relying on red font letters, phone calls and referrals to debt collectors to chase payment. While ‘lack of communication’ is often cited by property owners as an issue at management company AGMs. From the point of view of the property owner, customer experience has generally been overlooked.”
Farrell believes Block Angel will transform these customer experiences by introducing a a more relevant way of presenting information to demonstrate value and also collecting service charges.
“While it seems that property management agents have been slow to embrace new technology the truth is that they have not been serviced with appropriate CRM, accounting and payments solutions for their industry. Up to now solutions have either been inaccessible due to cost or inefficient in terms of the admin required to operate them. This has resulted in 80% of agents having low or negative margins.
“Historically there have been barriers in place in terms of accessing financial information which has caused an administration drag for agents, but with open banking there are many opportunities to automate processes that have been traditionally time consuming. Accessing bank statements and automating data entry allows management agents to spend more time meeting with boards and inspecting properties and less time carrying out admin. Block Angel integrates with accounting systems that offer automations in terms of bank feeds, reconciliation, and invoice data scanning.
Block Angel’s timing is impeccable. Community Associations around the world are facing a sinking fund crisis.
Farrell points out that in Ireland and the UK 80% of communities are underfunded and a similar figure exists in the US. With ageing stock, legacy defects, fire safety issues and near zero carbon targets, the sinking fund crisis will be further exacerbated.
“Property Agents are in a difficult position as in many cases when agents are advising boards to increase service charges and sinking fund provisions, the boards of directors are often not permitting the necessary increases to be made. A collective understanding of sinking funds is required among all property owners so that decisions can be made in the interest of all stakeholders.
“Block Angel will be extending a set of tools into reserve fund analysis, facilitating the communication of Building Investment Plans and communicating the provision or under-provision of sinking funds to community members.
“Our hope is that if we clearly demonstrate to owners, the seriousness of not acting vs acting today on sinking fund provision, more property owners and boards will prioritise sinking fund provision which will in-turn ensure the future financial health of residential communities, and the social quality and safety of their built environments,” Farrell explained.
Above all the platform is about communication between agents, owners and residents and providing people with insights into how their money is being spent, from refuse collection charges to landscaping and more.
Farrell explained that currently Block Angel has already signed up several property management businesses in Ireland and at least seven in the UK. As well as scaling up in Ireland and the UK there is potential for the technology to spread to the US.
“The sinking funds crisis is quite acute in the US where new legislation will be introduced that will directly impact property owners. The non-payment of service charges and the resultant lack of upkeep of buildings is very serious, not only in terms of money but also in terms of risk to people’s lives.”
“There’s a reckoning coming for these apartment blocks and the funds aren’t going to be there. We are currently creating a set of tools for building analysis and investment plans that help communicate the issue of sinking funds to the communities that will be affected.
“If you know the seriousness of not acting and instead can act today, the financial health, safety, and wellbeing of all stakeholders can be improved,” Farrell concluded.
If you are a block manager or volunteering on the board of a property owners management company, contact BlockAngel for a 30-minute video introduction and demonstration. E: firstname.lastname@example.org.