What is Right to Manage [RTM]?
 

 

Fed up with being ripped off? 

I spend a lot of my time listening to leaseholders frustrated by the actions - or inaction - of their freeholder or the sometimes appalling service offered to them by the managing agent. This is often compounded by excessive and all too often increased service charge demands.

 

The Agent cannot be trusted: they have already overcharged us by £27k...”
“The Agent’s fees are half of our service charge”
“They wanted £80,000 for the external redecoration when we got a quote for £6,000”
“The cleaners rarely turn up and when they do, they don't do a good job”

 

Most people in this situation feel they have no other option other than to just sit back and take it. Occasionally people will fight unreasonable charges using the Property Tribunal service, but they often get worn down by the sheer weight of bureaucracy, or they simply do not understand how to put a case together, or they just worry about the financial implications if they lose.

 

My advice always is.... don’t just sit there and take it, and don’t fight it either. Instead, take control of your property if you can. This enables you to focus on the future, to a time where you and your fellow leaseholders set the level of service charge, do the work you want, employ the managing agent you want, and most important of all, make the communal area of the property more like an extension of your home.

 

Research suggests that on average leaseholders can save over 25% on their service charge bills by taking control of their own property.

 

Average saving per flat

Cost

Average annual saving (%)

Insurance

30%

Management Fees

25%

Repairs & Maintenance

25%

Cleaning

25%

Grounds Maintenance

30%

*Miscellaneous

25%

 

*Legal services, bank & accountancy charges, utilities, security and lifts

 

There are three ways you can take control of your property

 

First, if your lease has a management company separate to the freeholder, you will find often you are a member of this company and can become a Director. Once you are a Director you have influence and can then take control – with your fellow Directors – of the day-to-day decisions on how your property is run. Often freeholders will not publicise this, or the current Directors are linked in some way to the freeholder/ management company and not making decisions in all the leaseholders’ interests. If this situation exists, this is the best mechanism to start taking control.

 

Second, if you live in an apartment where the residential part of the building is greater than 75% of the property you can apply for the, Right to Manage or Collective Enfranchisement. These are legislated processes where if you can bring 50% or more leaseholders together, you can formally give notice to the freeholder, and you as leaseholders effectively take control of the building. With Right to Manage, a company is created of which you are members and it takes over all management responsibility, but the ownership of the leases and communal property remains with the current freeholder. With Collective Enfranchisement, a company is created of which you are members and it forces the purchase of the leases and communal property from the existing freeholder and hence you take over management as you then effectively own the freehold.

 

Right to Manage is cheaper to achieve than Collective Enfranchisement, but you will have to keep on paying ground rents and paying for lease extensions, whereas with Collective Enfranchisement you can effectively vote to stop paying ground rents and extend your leases for nothing. 

 

Right to Manage will likely start at £100-£150 per participant and tops out at about £500 per participant, whereas Collective Enfranchisement will likely start at £3,000 to £5,000 and can be much higher depending the length of the leases in the property.

 

Thirdly, if none of the above applies, it is less easy to take control. But there is one option left where the freeholder and agent can be proven to not be managing your property appropriately. With this option, you as leaseholders apply to the Property Tribunal for Appointment of a Managing Agent. You must present evidence of the failings of the current situation and nominate a managing agent you like, and, if the tribunal agrees with you, they will appoint the agent over and above the freeholder’s agent to manage the property on your behalf. The agent however works for the tribunal more than yourselves, so it may lead to a better situation, but not necessarily one you are totally in control of.

 

ThePropertyyOwner.UK

 

If you would like to discuss any of the issues raised in this article,

then please email us at  Enquiring@thepropertyowner.uk

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© Jeremy Grundy/The Property Owner.uk