The cost involved in employing a managing agent is often questioned by leaseholders. We understand where they are coming from because for many flat owners and tenants, if we’re getting it right, the job we do is largely invisible. So it can be hard for residents to tell whether they are getting good value for money.
If more than 50% of leaseholders in a block are not happy with their current set up, under the rules set out by the Commonhold and Leasehold Reform Act 2002, they are legally entitled to exercise their legal ‘Right to Manage’ and set up a Right to Manage Company (RTMCo). This is a kind of ‘Brexit for blocks’, putting control back in the hands of the leaseholders, with the RTMCo taking on responsibility for managing the building. Leaseholders are free to choose whether or not they continue to employ a property manager to run the building on their behalf.
But – as with Brexit – be careful what you wish for. If you are going down this route – or considering it as a future option – you may be wondering if you could save yourselves a whole lot of money if you ditch your property manager and self-manage instead. So here are a few words of caution. There is a reason why professional property managers spend years gaining qualifications and ensure that their skills are kept up to date. A block manager is a specialist with detailed knowledge of all aspects of building management. He or she will have a good understanding of leasehold property law and compliance with statutory regulations, as well as the ability to communicate effectively with residents and industry suppliers. Taking on his or her role is no walk in the park.
Where blocks do opt to self-manage, the duties of the RTMCo directors as they relate to block management are complex. Maintenance is more than making sure the gutters are cleared and light bulbs replaced on a regular basis. Resident directors must decide on a programme of works to ensure the block is kept in good repair, cost it, collect the service charge in accordance with both the lease and statutory requirements and deal with any issues or disputes arising around arrears and non-payment. This in itself can be a minefield – and the bigger the block, the greater the potential for something to go wrong. Then there is buildings insurance and those all-important periodic reinstatement cost assessments which will need to be arranged and paid for. All aspects of compliance with health & safety, fire safety and other relevant regulations must also be taken into account.
RTMCo directors also take on the obligations of any other company director and not only do they have to ensure accounts are filed on time and company law adhered to, but they may find themselves personally liable for negligence should they fail to carry out their role safely and effectively.
Having said all that, for many blocks right to manage works really well. Landlords can be very remote from their tenants and may have little interest in the way a block is operated and maintained. Bringing the management responsibilities back into the hands of leaseholders – whether they self-manage or appoint their own property manager – puts them back in control of both decision-making and block finances.
At Ringley we have dedicated enfranchisement specialists to help you should you choose to go down this route. So if this is something you and your fellow residents are considering, talk to us at an early stage to ensure you fully understand all the implications. There is also a really useful step-by-step guide on our website which you can find by clicking here that takes you through every stage of the process.
Don’t forget, our property experts are always here to help you get the best out of your block, so get in touch today.