Ask our Experts

What our customers are asking

Question

"What is block management?" - H Norman ,

Block management can often be confused with AST (Assured Shorthold Tenancy) for individual flats. The former is a highly specialised and regulated area whereby the 'managing agent' is appointed by residents or developers to undertake the duties of managing he fabrick, facilities, amenities of a block of flates or estate funded by the payment of service charge by the occupants. There is of course a vast range of services this includes and managing agents will have this list available on their website. A recommendation for those looking to appoint managing agents would be to ensure they are regulated by the Royal Institute of Chartered Surevyors (RICS) or the Financial Conduct Authority (FCA) as they are entrusted with 3rd party monies and have a duty of care to ensure the highest standards of Health and Safety in all aspects of building management.

Service Management
A block management company is ultimately responsible for the maintainance of all communal areas of the block, whether that may be replacing light bulbs down to maintaining broken lifts or improving cleaning and garden areas.

You really must choose a block management company with pro-active response levels and ensure they have vetted contractors are deployed to carry out any work required.

The majority of work will be routine and non-urgent, very often there will be emergency works that are required under health and safety law. You need to ensure that a block management company has the required round the clock cover  provisions should you need them at any time.

Insurance and Claims 

Block insurance policies need to be scrutinised by the residnets to ensure the market has been researched and value for money obtained be it it's contents or more importantly the fabric of the building. The block management company or managing agent must ensure it's clients are fully protected and your cover is renewed on a timely basis to allow for multiple quotes to be obtained.

Site Visits

Site visits are an essential part of the duties of managing agents to ensure the block is compliant and up to date with all Health & Safety regulation. A block management company will regularly send qualified inspectors to ensure that all comunal areas, such as the grounds or leisure facilities, are in good working order and maintenance regimes are in place.

Accounts and Support Services

Accounting services provided by managing agents are crucial to ensure client monies are correctly allocated, spent, reconciled and audited on at least a monthly basis. Do ensure your chosen agent is FCA regulated to guarantee transparency and protection against fraud.

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Question

"What is a reasonable service charge?" - T Hart,

What even is a fair service charge ?

Normally your freehold and/ or managing agent agree the required service charges for your block. There is no set level defined by a lease or enshrined in law. 

The estimates laid out for itmes in service charge for your block do need be based on the actual costs of maintenance whichare normally estimated or quoted for by contractors. They are not to be confused with profit for the Freeholder or indeed the managing agent. All monies demanded must be go towards the maintenance of the building and what is charge must reflect a reasonable amount for the size of job, age of building, condition and amenities of the building.

When initially buying a flat your solicitor usually asks the managing agent or Freeholder for the current and future projected service charge levels, so you have foresight on the on ongoing charges before buy the property.

The avergae costs for these "Solicitor Enquiries" starts from about £275 plus VAT

Ringley have an historic reputation for reasonable service charges in the industry : go see our website area on client savings for proof : https://ringley.co.uk/savings. ARMA (the Association of Residential Managing Agents) reckons the average service charge in London should be in the region of £1,800 to £2,000 a year for a one or two bedroom flat. However this will course vary throughout the country but be wary of anything over £4,800 is a little high and you should conatct your managing agent for a breakdown. 

Why am I even paying Service Charge ?

Laid out in your lease will specify how your service charge is estimated, when it’s due and what it is utilised used for. Normally, service charges vary so they can alter from one year to the next in line what has been spent the previous year and what is been planned for in future years.

Normally, service charge will cover :

Day to day maintenance expenditure for the block (i.e. cleaners, gardeners, concierge)
Maintenance and specialised services (e.g. electricians, locksmiths, building and repairs people)
Electricity for lighting, lifts etc of communal areas
Buildings insurance
Managing Agent fees and associated admin expenses 
Your lease normally include provisions towards a reserve fund for major internal and external decorations.

If you are unhappy about the level of service charge :

Normally your lease will stipulate you have to pay a reasonable service charge (see above). If ithere is no such provision in the lease and you have received a demand for payment, you can then potentially challenge this.


Always ask your solcitor to scrutinise this area of the lease and ask them to gain an estimate of current and future service charges.Your prospective and inherited managing agent or Freeholder must let you have an annual statement layng out how the money was apportioned and ultimately spent. This is how it can be demonstrated that the money is being allocated professionally and charges are at a reasonable level.

If this basic information is witheld you are at liberty to query the charges (whilst not withholding payment which may put you in breach of contracted lease).  It’s more adviseable to make the payment and then seek legal advice or recompenset.

You can also apply your case to the First Tier Tribunal (FTT) to make a judgement on fairness. For futher advice go to https://www.gov.uk/courts-tribunals/first-tier-tribunal-property-chamber 

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Question

"How much should a property management company charge?" - P Ford,

If you are talking about a block management fee which is incorporated into your overall service charge then in London it should be around £275 per flat per annum plus VAT. 

Who pays the service or estate charge?
The service charge payable for a flat is usually laid out in your original lease.

Normally the charge is split equally between all the flats in the block within the development. If, a private development contains both flats and houses, the global service charge is split between costs for the estate as a whole (for example maintenance of any roads not adopted by the local council) and costs relating just to the blocks of flats, for example costs relating to lift maintenance. The former set of costs are split equally across all properties on the complex and the latter set allocated equally across the apartments only.

How is the service or estate charge broken down?
 

Funds necessary to pay contractors for ongoing maintenance, including their time and third party costs.
Funds or provisions needed for general repairs.
Funds or provisions needed to pay for cyclical, longer-term major works.
Funds needed to pay for insurance for the block.
Funds required for legislative upkeep, eg Health & Safety and statutory reporting aspects, billing and information provision.
Funds required for the services of the managing agent.
VAT and IPT (insurance premium tax) as applicable.


What is the difference between a service charge budget and a year-end service charge account?


The service charge budget or estimate is a share of likely costs for the forth coming year and is usually payable quarterly in advance. The estimated budget is based upon experience in previous year's expenditure and known items of future major expenditure.

The end of year service charge account is a statement of actual spend over the past year and your portion of those costs. When the year-end service charge account is provided, a summary of the amount paid at the beginning of the year for the service charge budget, (and the difference between the two) is included normally. If the actual year-end expenditure is higher than the estimated, the difference will need to be settled by the leaseholder. If there has been an over-estimate at the year-end service charge account, the difference will be carried forward to the next accounting period as a credit.

Why could there be a difference between the service charge estimate and the year-end service charge account?

There are multiple reasons why the actual amount expenditure annually may be different from the estimated budget :

Unforeseen expenditure eg emergency repairs.
Additional costs to remove non-domestic waste (fly-tipping).
Inflated buildings insurance premiums as a result of an RCA (re-instatement cost assessment).
Excess insurance uplift - higher claims on the buildings insurance.

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Question

"How much do management companies charge? " - F Arden,

Managing agent fees vary throughought the country anything form £250 per annum ber flat plus VAT to as much as £500 per unit for higher end blocks with high levels of amenity. A fair and reasonable level for a 2 bedroom property within the M25 should be around the £275 per flat per annum plus VAT.  

Who pays the service or estate charge?


The service charge payable for a flat is usually laid out in your original lease.

Normally the charge is split equally between all the flats in the block within the development. If, a private development contains both flats and houses, the global service charge is split between costs for the estate as a whole (for example maintenance of any roads not adopted by the local council) and costs relating just to the blocks of flats, for example costs relating to lift maintenance. The former set of costs are split equally across all properties on the complex and the latter set allocated equally across the apartments only.

How is the service or estate charge broken down?


Funds necessary to pay contractors for ongoing maintenance, including their time and third party costs.
Funds or provisions needed for general repairs.
Funds or provisions needed to pay for cyclical, longer-term major works.
Funds needed to pay for insurance for the block.
Funds required for legislative upkeep, eg Health & Safety and statutory reporting aspects, billing and information provision.
Funds required for the services of the managing agent.
VAT and IPT (insurance premium tax) as applicable.


What is the difference between a service charge budget and a year-end service charge account?


The service charge budget or estimate is a share of likely costs for the forth coming year and is usually payable quarterly in advance. The estimated budget is based upon experience in previous year's expenditure and known items of future major expenditure.

The end of year service charge account is a statement of actual spend over the past year and your portion of those costs. When the year-end service charge account is provided, a summary of the amount paid at the beginning of the year for the service charge budget, (and the difference between the two) is included normally. If the actual year-end expenditure is higher than the estimated, the difference will need to be settled by the leaseholder. If there has been an over-estimate at the year-end service charge account, the difference will be carried forward to the next accounting period as a credit.

Why could there be a difference between the service charge estimate and the year-end service charge account?

There are multiple reasons why the actual amount expenditure annually may be different from the estimated budget :

Unforeseen expenditure eg emergency repairs.
Additional costs to remove non-domestic waste (fly-tipping).
Inflated buildings insurance premiums as a result of an RCA (re-instatement cost assessment).
Excess insurance uplift - higher claims on the buildings insurance.

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Question

"Can a freeholder appoint a managing agent? " - B Knapp,

Yes they can and often do. Developers often pre sell the ground rent on leasehold flats to developers well before the block of flats is finished. In this way they guarantee a bonus revenue stream over and above the profit margin they have forecast for the buid.

The press has taken a paricular interest in this recently due to indifferent developers incorporating into the lease that for exapmle ground rents can after 10 years. The UK government has now put a stop to this and effectively banned this from happening to the point that Help to Buy aided properties (now in the majprity) can no longer be sold with any ground rent charges. The market is now severley restricted and grond rent levels will now head towards zero. If you are happen to be a leaseholder who falls into this category your initial step would be to form a Right to Manage Company (RTM) to get initial control of the block with a view to buying the freehold (enfranchisement) at a later opportunity. 

Your landlord or Freeholder will initially appoint the managing agent for your development if your lease allows it. The lease will normally be a Two-Party Lease – between the freeholder/landlord and the leaseholder/property owner. It could be a dreaded tri-party lease which incoporated the freeholder appointed managing agent.

Options available
This type of lease makes it more complex for leaseholders to change their managing agents. Possible options available are:

Persuade the Freeholder/Landlord to change managing agents - amicably, this normally happens without much fuss.
For this to occur you will normally need to demonstrate that there are problems/issues/fraud with the current managing agent. The type of problems that may exist are:

– Managing agent is in breach of the Freeholder's obligations under the terms of the lease relating to the management of the estate.

– Managing agent is in breach of the RICS Service Charge Residential Management Code or the ARMA code of practice for retirement leasehold blocks.

– The service charges are unreasonable and unnecessarily inflated.

You will need to demonstrate to the Freeholder that the issues exist and document all correspondence. Do gain support from other property owners and if a residents association does not exist then definately set one up to gain a common voice for all residents. You can find out how to setup a residents association by contacting us in the form on this page.

 

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Question

"How do you take over freehold?" - B Undercliffe, EN10

For residents to collectively buy the Freehold of their building they will need a majority of over 50% (the remaining residents will then have a choice to join and buy or remain a leaseholder of the newly formed Freehold Company). This process is commonly known as Enfranchisement whereby the cost of purchase and method of compulsory acceptance and release by the incumbent Freeholder is enshrined in Law ie. the price is fixed by formula and cannot be altered by either party. It is best to instruct a specialist solicitor to help you in this process.

Why buy the freehold?


1. You may feel your landlord is over-charging in various areas. Most common is insurance premium and service charge for mantenance and repairs, cleaning, etc. 

2. Change provisions laid out in your inherited lease that stop you making certain alterations and being charged for certain oyems like sub-letting etc.

3. Add value to your flat by buying the freehold or extending a lease - Often you can extend your lease for free to 999 years.

4. Nullify ground rent charges.

5. Potential buyers look for “shared freehold”in sales particulars when buying.

6. You may have the right to buy property certain sections or areas included in your lease, such as garages and gardens.

Do you even qualify to buy the freehold?


1. Essentially you have to be a long leaseholder and at least 2/3rds of the flats must have been bought on long leases (minimum 21 years when granted).

2. At least half or more of the leaseholders in the building must participate in the purchase.

3. There must be a minimum of two properties in the building. If there are only two properties in the building, both must be willing to purchase the freehold.

4. No more than 25% of the internal floor space can be used for or intended for non-residential applications (exc any common areas).

5. There are no right to collective enfranchisement if majority of the following conditions are not met : the block or property is a conversion into four or less flats and the landlord has owned the freehold since well before the conversion and has habitated there (or an adult member of the freeholder’s family has lived there) for the past year at least.

6. Non qualification if the freehold includes operational rail track, bridge or tunnel within its boundary.

7. No right to enfranchisement on properties within a cathedral precinct and National Trust property. Crown properties are also excluded, but in reality the Crown is likely to waive their right of refusal.

Woprth Noting - There is zero requirement for you to have owned the property for any minimum period.
There is also no obligation to participate. The non-participating leaseholders will become tenants of the new freeholder (ie former leaseholders). They can always apply to purchase the freehold later at later date.

Procedure


1. Choose a Nominee Purchaser. This is usually a company formed by the leaseholders and is the entitiy that will be on the document to be served on the freeholder. Your solicitor can organise this or use Ringley Law (www.ringleylaw.co.uk).

2.  Select a suitable valuation surveyor, who has experience in leasehold valuation to give an estimation of the purchase price. The leaseholders will in effect have to compensate the freeholder for loss of ground, loss of reversion (the flats would have reverted to him when their leases expire) along with half the marriage value (ie the uplift in the value of the apartments once they are enfranchised).

3. Submit the Initial Notice to the Freeholder.

4. The incembent Freeholder has 21 days to request information as to the entitlement of the leaseholders to enfranchise.

5. The leaseholders or residents then have 21 days to respond.

6. The Freeholder must then serve his counter-notice by the date laid out in the Initial Notice. This date must be a minimum of 2 months from the date that the Initial Notice was served to the Freeholder.

7. If the FReeholder does not serve a Counter Notice to the residents, then the Nominee Purchaser will have to apply to the court within 6 months for what is called a "Vesting Order".

8. Within the Counter- Notice, if the landlord claims the Initial Notice is not valid, the Nominee Purchaser then has to apply to the court for validation of the Initial Notice within 60 days/2 months.

9. If negotiations then breakdown, either party can then apply to the Leasehold Valuation Tribunal (or ITT as it is now called) for a judgement but not before the two months, but no more than the 6 months after the service of the Counter-Notice.

10. Then the tribunal’s decision is final and binding 21 days after they send it to the two parties. Both sides have the right of appeal in this period, subject to permission from the tribunal.

11. After the tribunal’s decision has become final the Freeholder then has 21 days to submitt a draft contract.

12. Both parties are to enter into contract within two months after the decision has became final. If the deadline is not met, a Vesting Order can be sought within a further two months.

For more information fill the form out on this page and we will be happy to help.

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Question

"How do I set up an rtm? " - M Michaels,

Right to Manage Company or (RTM's) are fairly straight forward to set up. Firstly you will need the agreement of over 50% of leaseholders. Then the best practice would be to appoint a specialist RTM solicitor who will take you through the steps and on your behalf serve notice on the Freeholder and by Law the Freeholder will have to agree to let you do this. You will then be free to chose whom you like to manage your property.

Introduction


The Right To Manage company (or RTM) provides a path for apartment owners within a block of flats to officially take charge of their own affairs with regards to the upkeep and management of their properties.

The RTM is a provision of the Commonhold and Leasehold Reform Act 2002 which enables the apartment owners to become members of a Limted company (which is Not for Profit) that can gain total control over the insurance, repairs, service charges and general maintenance of their block.

What do we need to setup an RTM Company?

In order to establish this Right To Manage Company you need be able to demonstrate the following minimum requirements:
The block or building must include a minimum of two flats.
At the very least 66% of the block must be let out  or leased to qualifying tenants.
If the block or estate is partly used for commercial reasons then no more than a quarter should occupy the total floor area of the premises.
For qualifictaion membership each tenant must be a leaseholder whose lease was initially granted for an original length or term of more than 21 years.
The minimum required number of qualifying residents or leaseholders must be equal to at least half the total number of flats in the building.


Setting up the RTM Company

This is where Ringley Law (part of Ringley block management) can help you. An RTM company must be limited by guarantee (not for profit). We can via online portal register your Limited by Guarantee Company direct with Companies House incorporating the prescribed memorandum and articles of association applicable for an RTM company. We can then approach your freeholder on your behalf and go through the necessary steps - see other sections or fill out form on this page and you will be responded to within 2 hours.
 

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Question

"How do I challenge a leasehold service charge? " - A Andrew,

This is a common question amongst leaseholders who either feel they are being over charged or that they are not receiving value for money form their managing agent. In the first instance they need to write to the managing agent stating their concerns and if a satisfactory response is not received the best route is to motivate as many leaseholders as possible to then bring up concerns at a documented residents meeting and if there is enough support they would normally vote to change agent. If there are legal barriers in lace whereby they cannot change agent themselves then they would need to form a Right to Manage Company (RTM) which will then leave them to their own devices to appoint whom they wish.

The provisions within the Commonhold and Leasehold Reform Act 2002, in Section 153, require at the very least :

“A  formal demand for the settlement of a service charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to service charges”.

RIGHT TO WITHHOLD

“A tenant may withhold payment of a service charge demand which has been demanded from him if (the requirement to provide the summary) is not complied with in regards to the demand.” “Where a tenant withholds a service charge demand under this section, any provisions within the lease in regards to non payment or late payment of service charges do not have effect to the period for which he withholds it”

The content of the summary reflects the introduction of the First Tier Tribunal (FTT - Property Chamber) in substitution for the Leasehold Valuation Tribunal.

SERVICE CHARGES – SUMMARY OF TENANTS’ RIGHTS AND OBLIGATIONS

This summary briefly lays out your rights and obligations in relation to variable service charges, must by law accompany a demand statement for service charges. Unless a summary is sent with a demand, you may potentially withhold the service charge. Thi summary doesn't give a full interpretation of the law so if you are in any doubt about your rights and obligations you should seek independent advice. Ringley LAw can help you with this.
Your lease does set out your obligations to pay service charges to your freeholder as well as your ground rent. Service charges are the charges for services, repairs, maintenance, improvements, insurance and/or the landlord’s costs of management so long as the costs have been reasonably incurred.
You have the right to ask the FTT to decide whether you are liable to pay service charges and various items contained within. You may make a reasonable request before or after you have paid the service charge. If the tribunal decides that the charges are payable, the tribunal then may also determine :

- whom should pay the service charge and who it should be paid to
- the totalr amount
- the date it should be paid by; and also how it should be paid.

However, you do not have these rights whereby :

- the matter has been agreed or admitted by you

- it has already been referred to arbitration (or has been determined by arbitration) and you agreed to go to arbitration after the disagreement about the service charge or costs arose
- a matter has been determined by a court.

If the lease allows your freeholder to recover costs incurred you may ask the tribunal, prior to which those proceedings were brought, to rule that your landlord may not do so.

Where you seek a decision from the FTT, you will need to pay an application fee and a hearing fee, unless you are exempt. Making this application may incur additional costs, such as professional fees, which you may very well have to pay.

The FTT and the Upper Tribunal (in determining an appeal against a decision of the First-tier Tribunal) has the power to award costs in accordance with Section 29 of the Tribunals, Courts and Enforcement Act 2007.

If your Freeholder :

Propose works within a building or any other premises that will cost you or any other tenant more than £250 per property, or wants to enter into an agreement for works or services which will last greater than 12 months and will cost you or any other tenant greater than £100 in any 12 month accounting period.

Your contribution will be limited to these sepecified amounts unless your landlord has properly consulted on the works or agreement or the FTT agrees that consultation is not required.

You then have the right to apply to the FTT to decide whether your lease should be changed on the grounds that it does not make satisfactory provision in respect of the estimation of  service charge payable under the lease.

You then have the right to write to your landlord to request a written summary of the costs which make up the service charges. The summary must be for the last 12 month period used for making up the period relating to the service charge ending no later than the date of your initial request, where the accounts are made up for 12 month periods; or cover the 12 month period ending with the date of your request, where the accounts are not made up for 12 month periods.


The summary must be given to you within 30 days of your request or 6 months of the end of the period to which the summary relates whichever is the later.

You have the legal right, within 6 months of receiving a written summary of costs, to require the freeholder to provide you with reasonable facilities to inspect the accounts, receipts and other documents supporting the summary and for taking copies or extracts from them.

You will have the legal right to ask an accountant or surveyor to carry out an audit of the financial management of the premises containing your dwelling, to establish the obligations of your freeholder and the extent to which the service charges you pay are being used efficiently. This will depend on your circumstances whether you can exercise this right alone or only with the support of others living in the premises. You are advised to seek independent advice before exercising this right.

Your lease may give your freeholder a right of re-entry or even forfeiture if you have failed to pay service charges which are properly due under the lease. However, to exercise this right, the freeholder must meet all the legal requirements and obtain also a court order. A court order will only be granted if you have admitted you are liable to pay the amount or it is finally determined by a court, tribunal or by arbitration that the amount is actually due. The FTT has a very large and broad discretion in granting an order such as this and it will take into account all the circumstances of the case.

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Question

"Can residents taking over management company?" - D Anter,

Residents have the Right to Manage their own development which is enshrined in Law by what is called a Right to Manage Process and legally form an 'RTM company. There are a few initial steps to start this process the main one being having a majority (over 50%) vote to change. Normally residents would then appoint a specialist RTM solicitor to act for them and serve the relevant papers and notices to the Freeholder. This normally takes about 4 months on average from start to finish.

There are two ways for leaseholders to take over their management company – only if the residents also own their flat. That is the Right to Manage and the Court Appointed Manager -In essence it doesn’t matter whether or not the leaseholder actually occupies in the flat – it is the ownership of the flat that gives them the right to take over the management of their block.

So in reality, residents can’t necessarily take over management of their block – but leaseholders (owners) can.
By leaseholders this means someone who owns a “long leasehold” flat ie with a lease that was originally granted for at least 21 years.

Here at Ringley, we have a dedicated five strong leasehold team who focus on work related to leasehold property : leasehold extensions, right to manage, and freehold enfranchisement. 

Is Right to Manage RTM the same as a Residents Management Company?

No, they are very different. In essence RTM's have the right to change agents as do RMC's but RMC's have far more control (see below). 

Two ways to take overcontrol of your block :

1. The usual way of gaining management rights is through (and by law) Exercising your Right to Manage (often referred to as RTM).

2. The alternative – an application to the First Tier Property Tribunal (or FTT), for the Appointment of a Manager although the application is to the FTT, this route of taking over management of your block is more commonly known as an application for a Court Appointed Property Manager.

The two routes are very different. 

It is important to note the Court Appointed Manager route. Even if you don't wish to seek to pursue it, others in your block mayhave a different sentiment. The resdients need to be aware that even an RTM Company can be replaced by a manager appointed by the FTT – and there is no minimum participation required for Appointment of a Manager.

And an application for Appointment of a Manager application can be made by only a single leaseholder

Can residents take over management of their block? Flat owners’ rights

The Commonhold and Leasehold Reform Act 2002 (“the Act”) provides leaseholders with the right to manage their estate. Provided you meet the qualification criteria, you may exercise the right by adhering with the provisions and deadlines set out in the Act, and without the need to prove that your freeholder/manager is in default.

As this is a “no fault” claim, freeholder and existing block managers will sometimes take purely technical points in an effort to prolong or otherwise defeat your claim, clearly when they wish to keep the management for any reason. It is for this reason it is so imperative to instruct a specialist RTM solicitor who is knows  Act in detail and whom can prepare the relevant notices for you to ensure the provisions are complied with and to mitigate the risk of such problems.

Why would you exercise your Right to Manage?

The Right to Manage gives qualifying leaseholders (owners) the right to take over the management of their block through via a LimitedCompany which they have incorporated for the purpose (“the RTM Company”).

The primary reason why leaseholders would decide to take over management of their block themselves is normally because the current block management is either too expensive or simply doesn’t get the work done satisfactorily. Ineffective maintenance or high service charges affect the value of your apartment, but also can make it really difficlut to sell on.

The RTM Company will be consist of the active and participating leaseholders whom will take over the management functions set out in the leases (except the right to forfeit those said leases).

There are limitations to what can be achieved under the Act - Be aware when you acquire the Right to Manage you are not actually buying the freehold title and you cannot therefore make any changes to the lease itself. You are then limited to managing the block with the provisions contained in the original leases.

Does the Block Qualify for a RTM Company?

To qualify the building or estate :

·         Has to be self-contained building or part of a building

·         Have two or more flats held by qualifying leaseholders

·         The number of flats in total held by qualifying leaseholders cannot be not less than two thirds of the total number of flats in the building

What actually is a self-contained building?

To qualify as a self-contained building, your block must be structurally detached so the question of whether or not a building is structurally detached or not the subject of many Court hearings - thers is plenty of case law exists on the topic to guide your advisor.

Premises which are exempt : 

·         Blocks with substantial non-residential parts

·         Blocks with resident Freeholders

·         An immediate Freeholder who is a local housing authority

·         Where there is already an RTM Company

Your solicitor or surveyor should be able to give you more information about your particular building to help you to establish whether your building qualifies. They may need to inspect the premises in order to form an opinion on this point which is crucial to your claim.

Setting Up Your Management Company


A new RTM company to manage your block will need to be formed at Companies House – do this early because there may only be one RTM Company in existence for a particular building so if someone else has formed a company before you your claim may not succeed.

Your block management Company must be “a company limited by guarantee” – a certain type of company without shareholders or share capital, and based around the fact that it’s members act as guarantors of the company’s liabilities.  This new management company must then have as its aim the acquisition of and exercise of the right to manage the block.

There must be a prescribed form of Memorandum and Articles of Association. Also the company name needs to include the ending “RTM Company Ltd”

The participating leaseholders (owners) will all be members of the RTM Company and any leaseholder that doesn’t participate in the art application, will not.

 

The Process of Your Right to Manage

Ringley Law will manage the process for you and ensure all procedurea and any timelines are adhered to.

1.    An initial enquiry into the facts – ie does the block even qualify and who are the qualifying leaseholders ?

2.    Establish that there is sufficient take up in each relevant building

3.    Purchase and professionally set up the RTM Company at Companies House

4.    Serve a Notice of Invitation to Participate to qualifying leaseholders in each block informing them of your intentions and to ask them to join in ( that is unless they are already members of the RTM Company).

5.    Enter into a Participation Agreement or have each leaseholder sign a Letter of Intent.

The Participation Agreement is avery important document especially with larger blocks as it is a binding document that commits all those who signit  to remain involved in the whole RTM process. It is deigned to ensure leaseholders stay committed through what can often be a frustrating and lengthy process.

6.    Select your prospective replacement managing agents. - this is Ringley's main business.

7.    Select a preferred Acquisition Date (i.e. the date when you would like to take over the right to manage). 

8.    Collect as much information as possible about the current management agent regime. 

9.    Serve your claim notice upon the freeholder and any third party management companies.

10.  Diarise key milestone dates to ascertain any objections to the claim

11. Consider whether ther is a need to claim a right of access during that period

Who can be a director of a newly formed RTM company?

It is legally possible for the RTM to just have one single director but it’s more common and effective for there to be between three and five directors depending on the size of the block.

What then happens when I sell my flat after the RTM process ?

If you are a shareholder in the RTM company normally your shareis transferred to the purchaser of your flat. It is very important for RTM company to represent the interests of those owning the flats in the block.

The future Management of your block after RTM 

On the Acquisition Date of your RTM Company all existing management contracts end automatically unless otherwise agreed by the RTM Company in advance.

Therefore do have a prospective and vetted managing agent ready BEFORE the Acquisition Date.

The RTM Company will now have the authority to take decisions about the management  and future of the block and to instruct a good managing agent of their choice. 

Block management is of course Ringley's core business so with Ringley Law acting to set up your RTM we are well positioned to help you. Please fill out the form in this page and we will contact you within two hours.

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Question

"Can leaseholders change property management company?" - B Hunter,

This depends on how the lease is originally structured from inception ie when the flats were initially built by the developer or Freeholder (or both). Normally the developer will have a preferred managing agent they work with during the build process to set service charges and appoint them upon final completion of the last flat being sold. Sometimes they then allow the residents to form their own Residents Management Company as a vehicle for the residents to choose their own agent. This is the ideal scenario but in a lot of cases the Freeholder or Developer have to be approached formally for this process to happen by way of a Right to Manage Process where over 50% of residents have to agree to invoke this process which has to happen by Law if the resident sentiment is there, There is an initial cost involved starting from a couple of thousand pounds.

If you are constantly unsatisfied with way your property management company is looking after your building and want to tahe control the way it is being managed there are numerous of options available for you if you wish to change your property management company.

Changing your property management company or managing agent can be legally demanding and potentially personally exhausting, so before you commence the process, it’s important to make sure you fully understand the process and have attempted to resolve any ongoing disputes through some avenues which are already available to you.

Depending on your circumstance, the initially step is to give your block management company the opportunity to improve (you've probably already done this !). Most large property management companies may well have already a complaints procedure in placeescalated to various industry bodies, for example the Association of Residential Managing Agents and will need to adhere to relevant management codes like the Royal Institution of Chartered Surveyors' Service Charge Residential Management Code and ARMA Q.

If you have already exhausted these options, next step is to find out how much support you have from your fellow residents then call a meeting between yourselves to find out whom is readyto help you change the way your block is managed.

Gaining the support of the other leaseholders will be crucial should you go down the route of setting up a Residents Association or already have one and want to use them to change the management company.

If it is unreasonably high service charges you are not happy about, you will need to find out whether these are unjustifiably high with comparable evidence, this can then be used when it comes to challenging the company and will give you a better idea of how much you should be paying when inevitably it comes to replacing them via RTM.

Ringley is a specialist block management company whom have a legal arm called Ringley Law who, again, specialise in the Right to Manage process. please fill out the form on this page and we will contact you within 2 hours. 

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Question

"What is a management agent?" - W William,

A management agent or managing agent is a company appointed by a Freeholder of a block of flats, or residents or the original developer of the block whose main purpose is to ensure the building is maintained to satisfactory levels in terms of the general upkeep and day to day maintenance, payment of essential items such as building insurance, annual health and safety audits, related staff wages etc. They do this by collecting what is called service charge annually and usually billed quarterly. This is an essential charge for all flats the details of which is laid out in the lease of the flat and is enforceable via the courts should it not be forthcoming.

What does a managing do ?


Whilst the detailed responsibilities of a managign agent will depend on both the management company itself and the actual property being managed, overall responsibilities are mainly cover :

Overseeing and instructing general day to day maintenance and upkeep of the block
Arranging and overseeing any rectifyong minor and major works
Collectingservice charges from residents
Organising the relevant insurance cover for the block
Circulating information on the current health and safety and fire regulations
Inspecting the block quarterly at the very least
Overseeing and dealing with all legal aspects within the leases and/or transfer documents

Do I actually need to use the services of a managing agent ?

Depending on the circumstance and the complexiity of your block or estate will determine if you opt to manage the block yourselves or as a sensible alternative engage a the specialist services of management agent to take on the liability for you.

If the block is fairly small you want wish to undertake the duties yourselfves however the bigger the block the large the scope of liabilities eg insurance management, health and safety and fire undertakings, financial and legal matters etc which all need qualified personnel.

What should I expect in a property managing agent?

When you are selecting a managing agent you certainly nee to initially check their professional indemnity insurance, financial standing and qualifications of all staff to ensure they are adequately trained and qualified. .

Recommendations by word of mouth are also imperative - here at Ringley we have grown through recommendation. Search on line reviews to ensure resident sentiment is good about he company, you may get a few rogue negative ones along the way, be ready for these and ensure the company has answered them visibly and honestly.

How much does a managing agent cost ?


You usually get what you pay for in any industry but particlurly in block management as IT systmes, PI and training good staff come at a cost but should be seen as an investment for your block. Fees usually start at around £250 per property per annum plus VAT.

Normally a managing agent will offer a fixed fee per flat or house per annum to manage the development and then the only real extra charges are for overseeing major works.

Ringley are slightly above the avergae in fees but are a 30 year old experienced, quality managing agent - do fill in the form on this page for an initial response - within 2 hours.

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Question

"What does service charge include?" - k Yellow,

Service charges for blocks of flats are designed to cover all necessary items of expenditure to ensure the building firstly is safe and complies with all the minimum health and safety requirements laid out in law and also the building is maintained to a good standard to protect the resident's investment they have made. Other common items include cleaning, gardening, lift and buildings insurance, electricity etc. It is also wise and sometimes compulsory (if written in the lease) to ensure future major expenditure is covered by way of annual reserve payments...almost like a separate savings account for future large works like external and internal decorations, new roof, lift replacement etc.

Service charges are demanded from by the leaseholder by the ultimate Freeholder (or RMC, RTM) for the services provided usually by contractors via the managing agent, as laid out in the lease. Service charges generally cover costs for maintenance, general repairs, insurance of the building and communal areas (often including roofs, foundations, windows, communal pipes, drains etc) and also higher ticket items like the employment of staff for the on site estate management of the block.

Service charges are normally be split into three categories :

Sinking funds – saved up for long term expenditure, eg roof replacement

Cyclical or annual expenditure – these are for more specific expenditure like external and communal area decoration

Routine expenses – Eg cleaning, insurance, gardening, on site staff wages etc 

Service charge monies are demanded in line with what is specified by the lease, normally quarterly or bi=annually. Demands by law should include a "summary of rights and obligations"  along with the full details of the current Freeholder. Should the service charge demands does not comply with either of these the Leaseholder then has the right to withold payment until the service charge is demanded in the correct manner.

Service charges can differ year on year depending on historic expenditure and estimated future expenditure for forthcoming period. They are normally collected in advance based on an estimate of forthcoming costs. Some (very few) older leases demand service charges in arrears. Prior to purchasing a leasehold flat is imperative  to find out what the current and future service charges are likely to be and what the level of the sinking fund may be for any major works that could be planned, to ensure owners budget accurately.

As most leases allow for service charges in advance, the leaseholders would generally require the freeholder to prepare an end of year charge statement to provide to each leaseholders - which can lead to an additional demand for the Freeholder to recover any additional costs. Where the freeholder has over estimated, the lease will determine whether the over payment can be retunred to the leaseholder, held as a credit for the following year or transferred to the sinking fund.

Service charges apportionment should be clarified in the lease, unfortunately this is not always done well, and leases often refer to the amount payable by each leaseholder to be fair and reasonable which could be determined to be, for example, the rateable value or the square footage of the property.

Where leases are more specific how the service expenditure should be apportioned and is often expressed as a fraction or percentage eg if there are 20 flats then each flat will pay one 20th or 5% of the total service charges expenditure. A variable percentage charge could also be used where there are flats with different numbers of bedrooms, for eg 10 apartments, 5 with one bedroom and 5 with two bedrooms would be reflected as 8% payable for those with 1 bedroom and 12% for those with two bedrooms.

Major works ie where works costng the leaseholder over £250 per property will require a consultation procedure - Section 20 Notices. This is covered in the Building Engineering of our website or fill the form on this page and we will contact you within 2 hours.

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Question

"What is a management company responsible for?" - N Nobler,

A management company is usually formed by the developer of a block of flats or the residents themselves. It is a bone fide company registered at Companies House with associated Directors. It is formed to ensure the running of the block has an accountable legal entity whose main aim is to ensure the smooth running of the block within the financial constraints of a service charge budget which is normally agreed by all residents at least 12 months in advance.

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Question

"What is a rtm company?" - F Hayman,

An RTM stands for a Right to Manage Company. It is quite common for a developer or Freeholder to appoint their chosen managing agent when the last flat is sold in the block of flats. If this managing agent is perceived by the residents to be inadequate, expensive or generally not fit for purpose then the residents by Law have the right to form their own RTM Company after which they can appoint a managing agent of their choice. There are specialist legal firms that normally assist in this process. Ringley Law are one of these companies that form part of the Ringley Group which specialise in all things related to block management.

IF YOU ARE A FIRST TIME BUYER OWNING AN APARTMENT MAY BE CONFUSING BY ALL THE LEGAL JARGON ASSOCIATED WITH IT LIKE RMC, LANDLORDS, FREEHOLDERS, HEAD LESSORS, LEASEHOLDERS, MANAGING AGENTS blah blah blah...

SO WHAT IS AN RTM COMPANY?

Block Management is normally associated with those duties the landlord has to perform as per the lease that relate to the maintenance of the building and the legal governance of the property. In reality this means the collection of service payments to pay for maintenance works and services while being directly accountable to the leaseholders of the block.

Having the right to manage means that the leaseholders can force the landlord to give them the collective power to assume block management responsibilities through a limited company. This gives leaseholders far greater control over how their money is spent and what happens in the building.

DO I OR WE QUALIFY FOR RTM?

Not all blocks will qualify to form a Right to Manage Company. To qualify the block must :

be at least or partly self-contained
have a minimumof 2 leasehold flats within the block
will have no more than 25% floor area which is classified as non-residential
have at least two thirds of the owners with leases longer than 21 years
50% (or more) of the qualifying leaseholders should also be in willing of becoming a member of the RTM Company. 

HOW EASY IS IT TO GO RTM?

Two crucial legal notices must be served in accordance with relevant legislation to ensure the RTM Company is compliant in Company Law. There are also aspects with the land registry that need to be addressed.This is a fairly complex process and you should look to appoint a professional firm to succeed.

HOW LONG DOES IT TAKE TO FORM AN RTM?


In the majority of cases an RTM application will take about 6 months from start to finish. It may well take longer if the Freeholder decides to contest your application.

IF WE HAVE A RTM COMPANY WILL WE STILL NEED A MANAGING AGENT?

Yes in most cases, this is adviseable as you are now Directors and need to be protected in all aspects of block management.

When the RTM process has been completed, the Directors of the RTM Company (usually volunteer leaseholders) will then immediately have the burden of block management responsibilities for the entire building to deal with and all legal aspects to mitigate against potentially. Having a professional managing agent on board to assist with billing, legal issues and maintenance matters but we recommended that the Directors maintain an overview of their managing agent and ensure that important matters such as setting the service charge budget are agreed with all residents and Directors.

SHOULD WE EXERCISE THE RIGHT  TO MANAGE WILL OUR SERVICE CHARGES GO DOWN?

Not necesserily but you will have total conrol and ultimate responsibility.

Many Landlords charge well above the market rate for some services which is down to their indifference to leaseholders. Exercising your RTM will then give leaseholders the opportunity to re tender certain aspects and services and in some cases achieve coste efficiencies.

Buildings Insurance levels is normally a quick win. In some cases Landlords may have been under investing in the block meaning that resident directors may feel an increase in their service charges is appropriate to get the building back up to standard.

In either case, the value of control is the main benefit to the leaseholders.

 

TO CONCLUDE


Maintaining a block or estate through a Right to Manage Company is a popluar, democratic and more importantly transparent (!) form of block management than the archaic Landlord controlled model.

Do note the RTM Company will be subject to a written constitution andneeds to be transparent with it's book keeping and finances. Also all leaseholders have the right to be elected to the board of directors of the RTM company. We recommend an AGM (Annual General Meeting) to happen annually to air views and re-elect directors etc

If you want to move forward successfully with the RTM process do fill out the form on this page and we will contact you within two hours.

 

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Question

"What can the property ombudsman do? " - M Antler,

If for any reason residents are not satisfied with any aspect of how teir block is managed and feel they have not had an adequate response by their agent they are at will to make a complaint to the industry ombudsmen. The main body for this would be the Royal Institute of Chartered Surveyors (RICS) whom have strict codes of conduct and any complaint is seen through and dealt with properly with full recompense where necessary.

Do you have an issue with your Managing Agent ? Have been treated appallingly and found that complaining to them has been futile ?Perhaps this is where a Property Ombudsman can help. Let's take a look and see how they operate and how they can help :

We are all aware things can and do go wrong in block management and is sometimes because the managing agent screws up. This is all very well bu you may you find yourself out of pocket or seriously inconvenienced because of a poor management? Well, if they don't respond to you, you could potentially take your case to the court. If you you don't have thousands of pounds at your disposal and free time to spare you could seek help from the Ombudsman.

Who are the Ombudsmen?

Ombudsmen are a free, impartial and independent organisation that helps you and me resolve disputes. There is also a Financial Ombudsmen Service (FOS), Ombudsmen Services for energy and communications providers and The Property Ombudsmen (TPOS). The services they cover are for ‘redress' which means they exist to put things right.

There are now only two redress schemes for the property industry - The Property Ombudsman (TPOs) and The Property Redress Scheme depending on hich one you take your complaint to will.  

What does The Property Ombudsman (TPOS) do?


The Property Ombudsman Service (TPOS) is the largest scheme in the UK and was established in 1990. They will offer advice and guidance and will go for early resolutions wherever and whenever possible.

You need to provide as much evidence and supporting documentation as possible so that they may consider it against the company you are complaining about. If TPOS think you may well indeed have a case, they will contact the company you’re complaining about with a decision.

The alleged "offending" company will then have 14 days to accept the decision or they can appeal against it. They can only appeal if they can prove there is an error in the Ombudsman’s findings or if ther is new evidence that emerges after the initial findings that have already been looked scrutinised. The TPOS will then inform you in writing with their decision and give you 28 days in which to respond.

The Property Redress Scheme


The Property Redress Scheme (PRS) was launched in 2014.

When complaining to the PRS, you are allocated someone to assess the validity of the allegation. The company you lodge a complaint about then has 10 days to either refute the claim or sort it out. Similarly with TPOS, any judgement made by the PRS can only be changed if an error has been made in the initial complaint or evidence provided afterwards.

When you get a resonse back from the company youhave a grievence with, you then have 15 working days to confirm whether you agree with the decision and, if you do, the company in question will then have 10 working days to comply with it. If you disagree with the decision, it will be up to the PRS to decide whether there should be further action.

How do I know who to complain to?

This will depend on which redress scheme the company you’re complaining about is a member of. If it isn’t displayed on their website, you are fully entitled to ask them to provide this information. If the company is not a member of any schemes, you can complain to Trading Standards.

What can I complain about?


TPOS often states the most common complaints relate to communication, alleged fraud and false marketing. Other complaints logged may be :

Poor or incompetent service

Failure to follow the guidelines set for agents under the Code of Practice and membership obligations

Unfair treatment or even bullying

What powers do the Property Ombudsman have?

Financial consequences

If TPOS support your claim, they can make a financial award to you of up to £25,000, although this is rare The Ombudsman states that, on average, claims are usually closer to the £500 mark.

Membership


To even operate as a property business, companies must be a member of one of these authorised redress scheme bodies. Without membership, they cannot continue to do business. If they do not comply with TPOS, they can lose their membership to the scheme.

There is also an agreement between the different redress schemes that if an agent has not honoured the decision of one of the schemes, they cannot join another until that obligation has been met.

When can I complain to a Property Ombudsman?

Both TPOS and PRS ask you to initially write directly to the company using their internal complaints procedure. Onnce and only after you have exhausted all other avenues will they assist you. You must give then give the company eight weeks to respond to your complaint before contacting either Ombudsman.

Get more help from Ringley by completing our form and we will contact you within 2 hours.

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Question

"How do you change a managing agent?" - H Angel, W1

It is actually more simple than you think to change your managing agent depending on who appointed them in the first place. If the developer of the block of leasehold flats appointed the managing agent then normally after the last flat is sold there are a few first steps you would need to investigate. Firstly some (very few) developers integrate the agent in what is called a tr-party lease where the agent is embedded into the lease. This is the most difficult scenario as you would need solicitor advice (www.ringleylaw.co.uk) to look at ways to extricate the management company and could end up in tribunal as you would have signed the initial lease accepting this set up. More frequently after the last flat s sold the residents get together and form a collective voice via a Resident's Association. Any discontent is then formally laid out to the Freeholder and they or their agent. Issues are either rectified or a case made to the Freeholder to remove the agent. Often the Freeholder at that point would remove the agent but if they don't residents would then for a Right to Manage Company whom would then have this power to remove the agent.

A few options for changing your managing agents


There are a few options for how to change your managing agent. See our main site for examples of our work.

Lease structure :

1.  A what is called "Tri-Party Lease" – Three parties, the freeholder/landlord, the management company and the leaseholder.

The management company is ultimately responsible for appointing the managing agent and normally all leaseholders become members of this company when they buy their pflat. Normally ther will be a full board of directors who choose and instruct the managing agent on all matters. One can find out who they are by searching at Companies House. If you become a member of the boardof Directors then you have the opportunity to make decisions and have an influence at the board to re tender the management agreement and company. You need to contact your incumbent managing agent and inform them that you would like to become a director of the management company. Request that they send your request to the current board of directors.

If you don;t want to become a member of the board then you need to convince the current board to re-tender the current managing agent’s appointment.

2. A Two-Party Lease – The freeholder and the leaseholder.

This type of lease makes it far more complex to change managing agents. The options available are:

Convince the Freeholder/Landlord to agree to change managing agents.
Invoke your Right to Manage. You will need 50% of the leaseholders to agree to become members. 
Purchase the Freehold with the other like-minded leaseholders in your block. Funds may be an issue as leaseholders cannot raise money privately. It is often easier and cheaper to claim your Right to Manage to obtain management control. Leaseholders may proceed with buying the Freehold at a later date when the lease runs low to around 70 years.
Make an application to the Tribunal to appoint a court appointed manager. If you can demonstrate inadequate or unprofessional management this process can work for you. 
3. Tri-Party with Managing agent named in the leases.

Three parties !, the freeholder, the Managing Agent and the leaseholder. This is very common in larger developments - there is very often a clause written into the lease to exit the agreement. 

In all scenarios we are here to help, do fill out the form on this page and we will contact you within two hours.

 

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Question

"How do I complain about a managing agent ?" - M Argent, SW4

There are various ways to do this with a few governing bodies. The most regulated body governing managing agents would be the Royal Institute of Chartered Surveyors (RICS) whom have the most reprisals for their members and indeed any unsatisfied complaints would render them expelled and unable to conduct further business.

No one likes moaning or compaining but sometimes there is no alternative. You need to understand the options available anf this is important if you want to achieve the best result and avoid unnecessary costs or delays.

How to complain about a block management company if you’re unhappy with the service you receive.

1. Complain Directly To the Company in question
Before formalising your complaint, it’s important to make contact with the block management companyand see if they listen to your concerns and attempt to solve the problem there and then.

They should have a formal Complaints Procedure so request it - If you’re still  not sure how to complain about your block management company, ltake a look at their website or management contract. Information about the company’s complaints policy should be listed in one or more of these locations.

The asl for a timesclae for resolution - ie ask how quickly your complaint can be resolved, so expectations are clearly set and no confusion met. If you’re still unhappy with how the problem is handled, or the solution offered, you can make your complaint official via 3rd parties see below.

Still Not Satisfied ?
As we’ll talk you through in this next section, you can escalate your complaint to the Ombudsman, ARMA or RICS if dissatisfied with the resolution offered – but only if you’ve already:

Explained to the ,anaging agent  why you’re unhappy
Fully outlined what they need to do for resolution
Responded to follow-up correspondence they may have sent you
It is very important to retain copies of all correspondence and log all calls you have made, noting who you spoke to, the date and the outcome of the conversation.

The more information you provide the Ombudsman with the more efficient their investigation will be although a successful outcome is never 100% guaranteed.

2. Escalate to Ombudsman/Redress Scheme or other

The Property Redress Scheme
The Property Ombudsman (TPO)
Ombudsman Services Property – was discontinued in 2018. Any property management company belonging to it should have transferred their membership to one of the two above schemes.

How do I complain about my property management company if they don’t belong to one of these listed schemes? 

Go to ARMA or RICS - any reptable block manager should definately belong to either of these bodies - we can assist you in all of the above mentioned by filling out the form on this page, we will respond in 2 working hours.

 

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Question

"Can I refuse to pay service charge ?" - K Emerseon, SW3

Normally no as the payment of service charge is a firm and legal obligation duty laid out within the lease you would have signed when buying your property. Often people would say 'why should I pay my service charge as the service I am paying for is not satisfactory' - the argument here is actually the majority of the money you pay in service charge goes towards the up keep of the building eg lifts, concierge, buildings insurance etc etc. The portion allocated to the agents fee to carry out this task is relatively small. So what you would need to do is assess resident sentiment towards perceived service and then start the process of looking for another agent whether this is by approaching the freeholder initially or if you have a right to manage then give the agent it's normal 3 month's notice.

The Top 10 reasons for non-payment of service charge :

Service charge arrears can build up and before you know it, cash flow starts to become a problem and the maintenance of the block severely suffers. To help minimise service charge arrears, it can be useful to understand why leaseholders are not paying and the actiona that can be taken.

Unhappy with quality of service generally

Commonly a leaseholder failing to pay their service charge  is as a result of a dispute relating to the quality of workmanship carried out by their freeholder of the development. Many leaseholders think that the landlord is not fulfilling their obligations according to their lease, and as such use this as a reason for not paying.

Concerns with level of work carried out

By contrast, a frequent issue for withholding payment can be leaseholders querying works undertaken to the development that are deemed unnecessary. We often hear concerns about improvement works being carried out by the freeholder for which the leaseholders think they should not be charged for nor held liable as they are not necessary.

Delays to works undertaken

Any delay in repair or major works being carried out to a development can make the situation worse as to the disrepair of the property, which can then ultimately require leaseholders to contribute even more towards the repair and maintenance of the block. An example would be roof repair works, and landlords leaving the repair and maintenance to the last minute.

Service charge demand not served correctly

A leaseholder who is not served with a legally worded service charge demand in accordance with section 47 and 48 of the Landlord and Tenant Act 1987 can withhold payment of his service charge until such time as he has received a compliant demand. The demand must be accompanied with the summaries of the tenants’ rights and obligations. This is one of the most common reasons for leaseholders withholding payment of their service charge. 

Service charge apportionment is not in accordance with what is in the lease

Some leases state a leaseholder’s % contribution to their service charge an if the leaseholder is charged more than the percentage stated, they have a valid reason to dispute the service charge arrears payable and withhold payment.

Service charge not demanded in accordance with the lease

Another very common reason for withholding payment is where the demands are not made in accordance with the lease.  

Demand not even received

The reason for non-payment could be as simple as the service charge demand not being received by the leaseholder.

Often the leaseholder who owns the flat may not be living in it, instead letting the flat to tenants. In which it is the responsibility of the leaseholder to provide an alternative address for correspondence if they do not wish to receive post at the property address. If an alternative address has not been provided, a leaseholder cannot argue that he has not been served with a demand. However, it is found that an alternative address has been given, but the demand has still been sent to the property address. This can be avoided with proper record keeping.

Can’t afford to pay

The leaseholder may genuinely be unable to pay the service charges due to lack of funds, job loss etc. This may come about following an unexpected major works project or  to changes in a leaseholders’ financial circumstances. In such cases, a payment plan may well be offered.

How to reduce non-payment of service charges

These issues often arise due to a lack of transparency, accountability and communication between the Freeholder and the leaseholder when it comes to the repair and management of the block.

A few pointers for avoiding these non-payment situations:

Ensure the lease is fully understood to make sure you correctly issue service charge demands in accordance with the terms of the lease.
Keep open communication channels with leaseholders to avoid unforeseen expenditure and keep accurate records of how contractors are alloctaed, expenditure levels etc
Ensure your service charge demands are compliant 

Ringley can assist with this aspect of arrears collection, fill out the form on this page within two hours and you will be contacted within two working hours.

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Question

"What are section 20 qualifying works? " - T Benter, SW18

In essence any works to a block of flats costing more than £250 per property will by law trigger a Section 20 (Landlord and Tenant Act)  Consultation process.

This is good news for all residents throughout the country owning leasehold flats who are not necessarily directly in charge for the administration of their building. By its very nature it forces the agents or those in charge to transparently consult with residents to obtain value for money for any substantive works potentially instructed.

So what is a Section 20 notice?

Freeholders or Landlors agents are legally obliged to issue a Section 20 (S20) notice to inform you about specific up coming works or services planned at your block or estate.

Normally the S20 notice will lay put what work is ptoposed, the reason it is being carried out and the estimated costs, it is designed to give you the chance to comment on the proposals; these are termed ‘observations’.

The form of notice will be determined by the estimated cost of the works and establish and agree if the freeholder intends to use a contractor with whom they may already have a relationship or long-term agreement. They then issue S20 notices for major works or indeed qualifying long-term contracts.

Major works


Major works are defined as decoration, repairs, improvements or refurbishments that are necessary to keep block or estates in a satisfactory state of repair and to enhance their life expectency as it were. Items relating to the internal decoration of a flat falls in the laps of individual leaseholders. 

A S20 consultation process has by law to be drawn up and gone through when the cost of major works being levied to leaseholders is greater than £250 per flat.

Qualifying long-term contracts

Qualifying long-term contracts (ie for more than 12 months) include items such as managing agent agreements, grounds maintenance, reactive repairs and facilities management contracts. They apply when leasehlders are likely to be asked to pay anything more than £100 a year, normally via annual service charges.

What do Section 20 notices have to do with my service charge?

in essence a freeholder gains feedback using the S20s consultation process after which they then can establish a contract. Once this is agreed and signed, the cost of the contract is shared between leaseholders and are based on many factors and appear as a major line item on the service charge demand.

More often than not these contracts last for many years which is why S20s are a very good opportunity for leaseholders to have their say. These items may well appear on your service charge demands for years to come as they are big ticket items

Different types of S20 notices

Schedule 3
When a Freeholder enters into a long term agreement with a contractor (or group of contractors) to enable major works, the contractor(s) is asked to quote for individual projects. Once these quotes are received Freeholders carry out a one stage Schedule 3 S20 consultation with affected leaseholders, explaining the costs. Consultations normally last a minimum of 30 days.

Schedule 4 (Part 1)
Should the cost of the planned work be more than £118,000, Freeholders are duty bound to goout to tender either publicly or privately. They will then follow a two stage Schedule 4 S20 consultation process, with each stage normally lasting a minimum of 30 days.

The Stage 1 notice gives leaseholders the chance to make observations and potentially nominate contractors (see lease).
The Stage 2 notice will give leaseholders the estimated costs from the tenders received.
 

For more information please do contact us in the form provided and we will respond within 2 hours.

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Question

"Can you sue a property management company for negligence uk?" - A Munger, WC1H

In short yes, however there are quite a few steps to go through initially. Firstly any complaint against a managing agent is best coming from a Residents Association, a Right to Manage Company (RTM) or a Residents Management Company (RMC) as this collective voice will have more weight rather than a solitary complaint from an individual resident.

Once complaint has been established it is advisable to initially write to the incumbent agent and allow them to answer and ideally rectify it. If their response is still unsatisfactory then check which ombudsman governs them. Normally agents should be members of the Royal Institute of Chartered Surveyors (RICS) in which case go to their website and follow their complaints procedure.

The agent may very well then deal with any issues or if in serious breach or negligence we advise you contact a specialist solicitor for recompense.

In an increasinlgy property owning country like the UK , the role and rsponsibilities of the managing agent is increasing. An ever increasing apetite for property investment compels for that investment to grow in capital value through effective block management. 

Managing agents or block management companies can potentially leave themselves open to various types of claims in the course of their contractual duties. do note there are a number of offsets that can be carried out and guidance taken that can be followed to reduce this risk. in the first instance and at the very least the managing agent should :

Make sure succinct written instructions are gained from client so that the extent of obligation is properly laid out from the beginning
Be fully compliant and have adequate insurances in place for all things fire, health and safety
Regular and detailed property inspections are carried out by a trained professional
Contractors used within blocks managed should themselves be fully vetted and have adequate professional indemnity cover

The above items obvioulsy cover the basics of meaningful holistic block management - if you are reading this to seek advice as to whether to either sue an incumbent managing agent or change them all together I am sure we can assist so do please fill out the form oon this page and we will respond to you within two hours.

 

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