The Leaseholder's 'Right to Manage'

RRen

I'm not sure how to post this as a new thread - but it's along the same lines as this thread - so apologies if I've done this wrong (am new to this site)

I recently bought a flat and the freehold of the building at the same time. i am therefore a 'resident freeholder' in a Victorian Terrace that has been divided into 3 flats.

Does anyone know whether I could be forced to sell the freehold if the other 2 flat owners got together and wanted to force the sale?

I am concerned because neither of the other flats is lived in by the owners (they are both rented out) and I'm not sure they would take as much care of the building as I will - I also don't want to go from being the freeholder (and all the time & effort involved) to losing even a share of the freehold??

Both flats, however, have relatively short leases - just over 70 years - so it might be worth it to them financially to try & takeover the freehold rather than renew their leases.

I assume the law has been set up to protect people against freeholders who are over charging / not taking care of the property - but is there any protection for a resident freeholder ?

Any thoughts / advice?

kjl26

Thanks Doozergirl for both those posts, that's really helpful. I have sent a letter that basically questions the reasonable-ness of the works, on many points, but hadn't used the LVT thing. Perhaps we should do that and then get on the RTM.

5 million...I know!! (I keep meaning to check out the insurance policy but it means at least a couple of letters as the agents claim that I need to pay them forty quid for a copy...when according to the lease advice people they are obliged to give us a copy for free. Sigh. Where are you btw? We are in N London, the agent we have seems to be quite prolific...)

kjl26

RRen wrote:

I'm not sure how to post this as a new thread - but it's along the same lines as this thread - so apologies if I've done this wrong (am new to this site)

I recently bought a flat and the freehold of the building at the same time. i am therefore a 'resident freeholder' in a Victorian Terrace that has been divided into 3 flats.

Does anyone know whether I could be forced to sell the freehold if the other 2 flat owners got together and wanted to force the sale?

QUOTE]


Hi Rren,
I'm not an expert and recommend you also have a look at https://www.lease-advice.org (hope that works, if not stick .uk on the end too!), but usually to buy the freehold a majority of leaseholders have to want to do so, and they must be 'qualifying tenants', and I think that means they must have a long lease and have lived there for 2 years. Someone will correct me if that's wrong.

So in a house of 3 flats 2 leaseholders have to want to buy it and qualify, and where there are 2 both of them must. I am not sure what happens in your situation as you effectively hold the leasehold for one out of the three as well as the freehold for all three...I would imagine that the worst (!) they can do is buy their share of the freehold, i.e you have a third each. I understand that the freeholder gets to set the price, though (subject to LVT if they appeal).

I think maybe have a look at the lease advice thing and have a chat to a solicitor too? It sounds a bit tricky.

Doozergirl

Rren, check the link that kjl26 provided but I'm sure there are protections in place where the freeholder lives in the property. When your leaseholders do ask for a lease extension, I'd just be senisble with the price you ask. As they're both landlords, they'll have no real interest in buying the freehold and would probably have difficulty communicationg with each other when the flats are tenanted. Lease extensions may well not be their priority either if they've been rented out for some time.

Kate, our flat is in South London. Our managing agents are Rayners. I don't think they're THAT bad really, but I know for a fact that any tradespeople quoting for them are purposely going to go high, because the managment company has no interest in value for money, nevermind following the MoneySaving principles. I'd love to see the money that goes to the agent, going into the kitty to actually get something done as the communal areas do need work and I think we've all reached agreement that we will pay into a sinking fund each month.

EdInvestor

RRen wrote:

I recently bought a flat and the freehold of the building at the same time. i am therefore a 'resident freeholder' in a Victorian Terrace that has been divided into 3 flats.Does anyone know whether I could be forced to sell the freehold if the other 2 flat owners got together and wanted to force the sale?

Possibly, but as a leaseholder you would still be a part owner, one of three shareholders in the owning company. You should really have established all your rights and obligations with your solicitor before you bought the freehold.

I am concerned because neither of the other flats is lived in by the owners (they are both rented out) and I'm not sure they would take as much care of the building as I will - I also don't want to go from being the freeholder (and all the time & effort involved) to losing even a share of the freehold??

The latter wouldn't be possible: and if you are looking after the building well ( at reasonable cost!) then I can't see why they would want to. They could go for the Right to Manage, but again you would still be involved as one of the leaseholders.

Both flats, however, have relatively short leases - just over 70 years - so it might be worth it to them financially to try & takeover the freehold rather than renew their leases.

They would have to set up a company ( of which you would also be a shareholder) to buy the freehold from you ( which costs money) : which would not be worth doing if the price of lease extensions was reasonable.

I assume the law has been set up to protect people against freeholders who are over charging / not taking care of the property - but is there any protection for a resident freeholder ?

No protection that I know as such - freeholders of course already have plenty of legal rights and usually the means to enforce them. In the end though, any resident freeholder who looks after the building well and does not overcharge for services provided isn't likely to have problems, especially from non-resident leaseholders.It's really up to you.

hazeyj

I thought the right to manage was where the freeholder managed the building as if its just an agent they can be replaced?

There have been a few buildings in Manchester where they have forced the right to manage against a certain developer/freeholder and had to go back to them in the end as they just couldnt cope with all the responsabilities; preparing and monitoring accounts, contractors, etc

Its very important to have regular contact with your agents so that all of the above horror stories dont happen.

Also some leaseholders seem to think that all the service charge goes to the agent (as some in my block do) and I am constantly explaining to people that the service charge pays bills and doesnt go to the agent directly, only a fee per apartment. This is why I am obsevvive about why we should actually keep and eye on whats being spent.

With regard to the building insurance, if you can prove that the freeholder/agent is making profit on building insurance then this too can be forced out of their control.

Some agents just take advantage of the fact that most people dont know they can be replaced.

Sinking funds are excellent as they do provide cover for unexpected large bills like the above but I understand that their is a limit to how much a sinking fund can hold..I may be wrong though.

I really cant understand why agents are hitting leaseholders with these large bills, as part of their job (ie what they get paid for) is to produce budgets to build the service charge up for such circumstances. Its very bad management on their part if they cant produce five year plans.

kjl26

Doozergirl wrote:

Kate, our flat is in South London. Our managing agents are Rayners. I don't think they're THAT bad really, but I know for a fact that any tradespeople quoting for them are purposely going to go high, because the managment company has no interest in value for money, nevermind following the MoneySaving principles. I'd love to see the money that goes to the agent, going into the kitty to actually get something done as the communal areas do need work and I think we've all reached agreement that we will pay into a sinking fund each month.

Ours are Haywards, part of Erinaceous group, and I also don't think they're that bad, just as you say they have no interest in saving money for the leaseholders and every interest, in common with all management companies, in making the cost of major works as high as possible (as they are allowed to take a % fee). If it was all more transparent it would be a start, as we have no idea where the 'maintenance' money has gone over the last decade - certainly not on maintenance. Likewise our communal areas need doing, and this is part of the proposed work I agree with: but if we were able to decide ourselves how it should be done that would be great - really it's just the hallway of a single victorian building. There is lots of moneysaving to be done on that but the management company won't bother. Sinking fund is a good plan and something we have also agreed on, should we get RTM. Hope yours goes well

kjl26

[I thought the right to manage was where the freeholder managed the building as if its just an agent they can be replaced?]

Hi Hazeyj - RTM is where the leaseholders take charge of the management of the building and either appoint an agent and manage the relationship with them (rather than the freeholder doing the same or not at all), or run the building themselves. What you have doesn't sound much different?

Re the responsibilities of running the building, I agree that it can be difficult, esp in a big apartment block, but really when there are just three flats it seems a bit much to pay an agent a premium to manage something you could organise and do yourself.

[With regard to the building insurance, if you can prove that the freeholder/agent is making profit on building insurance then this too can be forced out of their control.]

I read about this. However I don't think that they are making a profit out of the insurance, I just think that they have a stupid quote and because they don't have to pay for it don't care about getting the cheapest deal: I am planning to submit alternative quotes to them but they will charge an admin fee (!) and can come up with spurious reasons not to take the quotes. I know I could then get it resolved at LVT but with all the hassle and bureacracy involved I would rather we could just run the building ourselves.

[Some agents just take advantage of the fact that most people dont know they can be replaced.]

Could you possibly tell me a bit more about how you got yours replaced? It sounds interesting and possibly a good alternative for us because we're still considering as a group the pros and cons of RTM. But I think you mentioned in another thread that you have weekly meetings with the agent to keep track? I think in my building that would be a bit excessive and it might just be better to have control of it ourselves, if we are going to spend that much time on it.

[I really cant understand why agents are hitting leaseholders with these large bills, as part of their job (ie what they get paid for) is to produce budgets to build the service charge up for such circumstances. Its very bad management on their part if they cant produce five year plans.]

I agree. But I think sometimes it's to do with the things they can charge for and the things they can't - anything outside the day-to-day stuff, for which they get their fee, attracts extra cash, so I guess unscrupulous agents could make a lot out of being badly organised/managed. (Also if they had a five year plan, they might have been able to inform us of planned major works before we bought the flat...we got a letter 6 months after moving in ).

Katie