Leaseholder campaigning

Ringley was set up to champion leaseholder and property issues at a time when the freeholder was king and leaseholders had few consumer rights. Our mission to deliver an understanding of property legislation in a jargon free, accessible way for all.

The 1993 Act was pivotal. We saw a future where Leaseholders could expect service, not just transactions. We wanted to be 'reassuringly better' and transparent in all our dealings. By 2003 we had written up '100 percent transparency, just ask' as our brand promise. We built our the range of associated property discliplines to 'to become a one stop property shop', and evolved so our vision became 'good advice, great service, by brilliant people.... Every time', and our guiding principle that what we do needs to be good enough 'to generate recommendations'.

We have participated in raising issues as a response to Channel 4 Despatches documentaries such as Property Nightmares : the truth about leasehold. Read blog on this topic

Our MD, Mary-Anne Bowring calls for changes to rectify fundamental flaws in leasehold legislation and has written to key government officials and participated in the all party working group on leaseholder reform as well as lobbying through her role in the Federation of Private Resident Associations.

Mary-Anne was also instrumental in encouraging the Institute of Property Management to build the ‘Property Management Apprenticeship framework’.

*ARMA –Association of Residential Managing Agents

Increase the powers to the Leasehold Valuation Tribunal

To address the repairs time bomb, blocks of flats with inadequate or no reserves clauses are the most likely to miss redecorations due and fall into disrepair. The industry needs legislation to give Tribunals greater powers to vary leases. Currently the Tribunal only has powers to vary leases where the lease does not adequately provide for the service charge. The Tribunal has no power to deal with leases which provide for service charges in a wholly unworkable way.

Examples include:

• leases with no reserve fund;
• leases that do not provide for the cost of a Managing;
• leases that do not provide for the cost of independent service charge accounts to be produced;
• leases where the ‘Managing Agent has been written into the lease’;
• no obligation for freeholder retained units to pay service charges, if the freeholder has not granted themselves a lease!;
• leases with no decorations clauses;
• leases silent on whose responsibility balconies and roof terraces are;
• leases which expect the lessee to decorate their own windows, 10 floors up!

A democratic right to remove a Managing Agent who has been written into the lease

Imagine how upsetting it would be to buy the freehold then find out that you can’t manage the block as that right is given to a Managing Agent that you did not choose for 99 years! That’s hardly democracy, surely it was not meant to be this way?

Then what if even if you have 51% of leaseholders on board? Right to manage legislation won’t help you because there’s a car park underneath your property and is shared with other users. How can this be fair? It needs addressing.

Extend the HM Land Registry registration requirements relating to service charge schemes

More information is needed when land transfers involve service charge schemes so it is easier for a good Managing Agent to resolve issues. The Land Registry could eradicate many disputes by requiring:

• registration of plot numbers and postal addresses on new build developments;
• registration of the service charge percentage(s) – as in court ‘informal agreements’ cannot be relied upon;
• a certificate of compliance prior to registration of every residential leasehold sale to protect buyers;
• registration of agreements/notices to change lease percentages or vary contributions;
• registration of licences to alter along with a new lease plan;

Put simply Managing Agents spend too much time chasing lost paperwork.

Pooled bank accounts must be outlawed.

Banning mixing all Client money together legislated for under The Commonhold & Leasehold Reform Act 2002 never came into force. This leads to rumours that ‘leaseholders money is invested in the money markets’. At Ringley we go further, each Client can get a copy of a bank statement of their Client account direct from the bank – we believe in 100% transparency. Ringley have the expertise to carry out forensic accounting, trace missing money, or carry out a management audit to look at ‘value for money’, management policy and whether costs are reasonably incurred, i.e., an expert opinion of value and reasonableness.

Simplify the Companies Act for blocks of flats

Parts of the Companies Acts are simply too onerous for small blocks of flats. When a Companies House leaflet sets out that management companies should be run as ‘dormant companies’ meaning the duty is to file a balance sheet only, then why do we have to have an AGM to talk about dormant company accounts but end up talking through the service charge accounts instead?

Leaseholders are continually confused between the service charge accounts and the company accounts. If the service charge accounts had to be filed at Companies House as well as the dormant balance sheet then life would be simpler.

Prescribe an example balance sheet for service charge accounts

Consistency in balance sheet accounting : the ICAEW guidance note does not go far enough. We need a prescribed form for service charge balance sheets.

• You’ll get one accountant disguising any deficit or balancing charge by writing it off against reserves on the balance sheet ….. buy in this block and as a leaseholder cashflow and getting anything done may become rather uncertain.
• You’ll get another accountant putting the balancing charge in current assets (even if it has not yet been billed) – and what if it never is?

A clean balance sheet should not have more than one year’s balancing charges brought forward, it if does a leaseholder may get a surprise demand relating to a period before you even owned the property.

• Some Accountants and indeed Managing Agents merge all the reserve funds together. Not good if for example you own a house and don’t pay into the flats fund...... but your money is being used.
• Many Accountants will tell you it is not their job to read or understand the lease – this must become an express and absolute requirement even if the lease requirement is not audited. How else is their opinion (a) independent and how (b) can it therefore comply with the RICS Code of Practice for Managing Residential property?

Then there is the problem in some resident controlled blocks where leaseholder self-interest sees a conflicted individual cancelling or refunding reserve funds because they want to sell up.

We have Tribunals that expect management companies to apply balancing charges even if there is no cash to do so leaving blocks with disputes and arrears. Typical tri-party ‘residents management companies’ leases puts the full responsibility for covering cashflow shortfalls onto the management company Directors, hardly what a volunteer RMC Director expects. What leaseholder really buys a flat thinking they are buying into a business and therefore might be expected to fund cashflow when the times are bad?

Extend the Section 20 statutory leaseholder consultation requirements

The duty to consult leaseholders on spending over £250 is great. Is £250 not outdated, it was set in 1985? And is £500 not ridiculously low for a block of two flats as the legal paperwork for the Section 20 consultation process undoubtedly costs more than the works themselves!

Section 20 must go further and require disclosures on ‘related party transactions’ or a statement that there is no relationship by ownership or control with each of the proposed contractors. And, the absence of such disclosures should invalidate a notice.

Deal with key flaws in Right to Manage legislation

RTM memberships should become transferable with the leasehold title in the way that shares in a Freehold enfranchisement company do. Because they don’t, this leaves RTM members constantly having to track who is selling and to recruit new members. And, as members diminish the risks and costs increase unfairly between the last remaining members.

Simply legislate that for RTM Company expenses, i.e., company secretarial fees, company accounts, and directors and officers insurance for RTM Companies become service charge expenses. Else with diminishing members as RTM’s mature the RTM becomes increasingly dysfunctional with insufficient members to bank roll them.

The RTM company only has control over the ‘lease-based’ transactions as. RTM steps in to grant approvals for assignment, underletting, charging, parting with possession, the making of structural alterations or improvements or alterations of use and the like; but can only do so after up to 30 days notice must first be given to the person who is, or each of the persons who are, landlord under the lease.

However, for other matters which affect the land but are outside the lease, such as when the Land Registry requires a compliance certificate to register a sale the RTM company cannot provide this despite being the party who is managing the lease.