The Leaseholder's 'Right to Manage'

Doozergirl · 26 September 2006 at 2:52PM

I'd read a bit about it on the Leasehold Advisory Service website here: http://www.lease-advice.org/rtmframe.htm

Basically any owners of leasehold flats can take the managing of the building away from the managing agent. It sounds simple in principle but the more your read on, the more daunting it becomes. However, a quick conversation with one of the recommended firms in the above link and it transpires that for the total cost of £500 inc VAT for the four flats, they will deal with the entire Right to Manage process from start to finish, dealing with managing agent and freeholder and in 5 months we get to sack the agent. :beer:

I can't understand how this wouldn't be of benefit to anyone in a small block that has to deal with a professional managing agent. 66% of you need to be up for it; you can either manage yourselves, or you can employ your own, cheaper agent to collect the monies but do the shopping around for the essentials yourselves.

For reference, we own a flat in a modest, purpose built block of four. Service charge is £200 per flat, per year which is fair considering we have to arrange our own insurances. However, bills keep arriving and last financial year the total cost of works, communal electricity and accounts was £558.41 The agent's "cut", proudly listed next to them is a true insult to the intelligence at £1146.00 - two third of the total bill!

Not much of a post in terms of creating conversation, but maybe it will provide some motivation for anyone not aware of the Right to Manage or someone else suffering at the hands of 'professional' managing agents. If next year's bill was going to look like the last, we'll already have saved over £500.

dmg24 · 26 September 2006 at 4:35PM

I think Right to Manage is a fantastic idea, I am in a maisonette so only one neighbour to convince, but they are 'scared' about upsetting the developer. Who cares what the developer thinks?!!

Have worked out we would save approx £400 a year each, but I obviously can't do it on my own - some people are so apathetic!

Doozergirl · 26 September 2006 at 6:01PM

When there's only two of you, I can't see why they wouldn't want to. I don't really believe managing agents do much work on such small buildings, especially, if like it sounds, the property has only recently been redeveloped.

I suppose they'd think differently if the managing agent turned up at the door each year and asked for their £400.

EdInvestor · 26 September 2006 at 6:11PM

Just a word of warning: it's the collecting of the monies that is often the real problem. It may surprsise you to discover how difficult it can be to extract even very reasonably service charges out of some leaseholders.

There's no doubt that some managing agents are rapacious and some are lazy, deserving the sack.But hostory suggests that doing it yourself may not always be quite as simple as it sounds.

Doozergirl · 26 September 2006 at 6:24PM

I think managing agents have their place too, but to me it's a fact that any contractors they use will inflate their prices because they know the managing agent has no interest in saving money at all.

Using an agent to collect the money and issue notices to any of the less co-operative leaseholders could still be a good MoneySaving route, especially if works are planned. At least a dialogue between leaseholders discussing when to carry out work and how to pay it would be less stressful than being given 15 days to pay a bill for £2500 for what equates to one window. :wall:

tomstickland · 1 October 2006 at 8:28PM

Thanks for this useful thread.
I'm having problems with our management company and their extortionate prices at the moment and hope to look into self management. I think that all of the residents of this block would be totally for it - noone has a good word to say about the agents.

kjl26 · 2 October 2006 at 11:18AM

Thanks for this Doozergirl - we are in the process of asserting RTM for our building of three flats and so I have been studying this for a while. I can see how it would get more complicated in larger blocks but for us it's a no brainer - all three leaseholders are willing to cooperate (the only worry is that this doesn't continue, but all decisions will be majority ones, rather than a full 'everyone in agreement' thing).

Currently our service charge is around 1300 per flat, inc. buildings insurance, but the building is over-insured and I could get a quote for about half the price without really trying, and 1500 in total has disappeared annually for 'general repair': no repair has been done in 9 years (since the same agents converted the flats) and they now want to do major works, basically repairs to brickwork, roof tiles, etc., costing in the region of 30K for the whole building.

Lots of things they have done have demonstrated that they are in it to get away with as much as possible, and there are so many things we can contest: it would be brilliant if we can get RTM, and decide what repairs are necessary and when, and choose how to do them, ourselves, without writing several letters a month that are then ignored by agents who use surveyors and builders etc. apparently from other companies but all registered to the same address...?!

Sorry, rant over, I agree, RTM is great and I have a stack of info about it now so would be happy to chat to anyone else in a similar situation.

Cheers
Katie

Doozergirl · 2 October 2006 at 12:07PM

Katie, That's shocking!

Having converted four flats four years ago and still being the freeholder, our service charge was £500 including buildings insurance for £300k. Being a new conversion, the only repairs needed to be carried out have been very minor indeed so far and are covered by the amount paid. They're taking up their RTM, which is a relief for us as we never really wanted to be freeholders but bizarrely, they didn't want the responsibilty of Share of Freehold when they bought

As for our own leasehold flat, we're speaking to Canonbury Management, listed on the lease-advice website and it's so simple. Within a week, we've had a meeting with the other leaseholders, they've written us the cheques and we paid the bill online last night. I'm about to email over the form which will see me as a company director by the end of the week. :rotfl:

kjl26 · 2 October 2006 at 12:28PM

Hi Doozergirl,

Well ours was converted 9 years ago - and the buildings insurance is for 5million (sorry pound sign doesn't work) - a little excessive perhaps???! It's an old three storey victorian terrace, total market value of the flats less than 1 million.

Anyhow the fact that they only converted 9 years ago, haven't felt the need to touch it till now, and have squirrelled away 14K in the portion of the SC dedicated to 'repair' means, I think, that we have a good argument that the need for the work (if indeed it is necessary, which I am not sure it all is) arises from previous neglect. Also, I understand that while for normal everyday repair they can't charge a % of the cost for their work (since they already charge a separate annual fee, absorbed in the SC), they can take up to 10% of the cost of major works...I might be a bit cynical, but maybe that's one reason they haven't spent on everyday works but are so keen to make them all into 'major' ones?!

Anyhow, re your RTM, has it really gone through that quickly? I understood that we have to serve notice on the freeholder etc. and they have three months to acknowledge, and after that it is another 3 months till it can take effect? Obviously this process therefore might not prevent these works - which is why I am still keen to pursue other avenues - but the episode has demonstrated that RTM is without doubt the best way to go ASAP. I think per flat we'll be saving 200 quid a year just on insurance. each. Madness.

If you have time i'd be grateful if you'd let me know the timescale for your RTM application - I'm planning to nip up to Companies House later and sort out a company (!!) and go from there.

Doozergirl · 2 October 2006 at 1:01PM

£5 million!! What's it made of?!

Has your Managing Agent issued you with a Section 20 for the work yet?

Us taking up the right to manage stems from a bill and the Section 20 notice for £2100 for each flat for what equates to one window each. The company dealing with RTM told us to write back to the managing agent. This is what I wrote:

"In response to your notice, pursuant to Section 20 of the Landlord & Tenant Act 1985, we object to the works on the grounds of the scale of the works and the reasonableness of the works. We would like the Leasehold Valuation Tribunal to determine the reasonableness before we are willing to proceed."

Each of the three flats going ahead with RTM has signed it. According to Canonbury Management, this will stop the works going ahead and by the time they get anywhere near the LVT, we will have RTM.

Doozergirl · 2 October 2006 at 1:09PM

Re: Timescales, they say 5 months. I have blatantly copied this from an email they sent me:

Firstly, we will form a Right to Manage company for your property. We form these electronically the same day, guaranteeing error-free formation.

Then, we will serve statutory invitation notices on each lessee and the freeholder. Again, this is electronically produced and we check information against the land registry. There is a 4 week statutory delay at this point to allow members to join.

We serve the statutory Claim Notice on the freeholder and management company. This is also electronically produced. The freeholder/management company then has 4 weeks to counterclaim but as we form the companies and documents electronically, the two grounds that are open to them for counter claim do not exist and so they cannot counterclaim unless an error has occurred in which case, an application to the LVT is required - they are usually sympathetic to RTM Claimants.

After 3 further months statutory delay, your new RTM Company is responsible for managing the building. We then transfer the company back to yourselves and you are free to run the building yourself or appoint a management company.

The Leaseholder's 'Right to Manage'

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