Right to manage -disadvantages?

Sparklingsea

Hi all

I have been trying to learn about Right to Manage as I am interested in buying a flat with this.

Please can anyone advise me of the disadvantages of buying a flat where there is the RTM?

What if the Director wishes to leave or other occupants don't pay their service charge? What idf people try and sell and they haven't paid it? Couldn't sorting that out be a nightmare?

Currently the service charge on these flats is much higher than I would expect and it doesn't look as though the RTM company are tending the gardens well.

The vendor has said "oh, you and the neighbours can change the RTM/service company and bring down the charges" but I wonder why this hasn't been done already??

Your thoughts would be greatly appreciated


Sparky

Soundgirlrocks

Hi I've recently bought a flat with share of freehold and the owners employ a managing agents, I think it doesn't matter if you guys manage it your self or employ some or have a landlord who does it for you if no one can be bothered to take on the responsibility then you will have trouble either way! Our block is in a real mess, but I knew when I bought it I could make a huge difference once I got involed. Our issue is the majority of the flats are buy to let's and the landlords don't get involed with what's going on in the block. At a recent meeting only two of us turned up out of 7!

From a legal point it makes no difference if you have right to manage or it's done by an external agent if people don't pay the service charge they are in breech of thier lease and the company can take them to court to recover the funds / evict.

G_M

Having a pro-active freeholder can result in a well managed building.

Having a professional managememt company, employed either by the freeholder or RTM company owned by all residents will push up the costs and will EITHER result in a well managed building OR they will do the minimum and be a disaster.

Having a RTM self-managed building is entirely dependant on the make-up of the occupants. Where they cooperate well, both by paying regularly AND by getting involved in the management, it will result in cash savings AND a well managed building. But where they either do NOT fork out each year AND/OR no one gets involved in the management, then it can be a disaster.

Best advice is to knock on the doors of other flats and have a chat. You'll learn much nore about the strengths/weaknesses from other flat owners (or their tenants) than from the vendor.

propertyman

Apart from G M excellent advice a good look at the building and its services and how well they are being performed or what needs doing, along with the budget and accounts can show you what plans are afoot.

A statement in the accounts that large amounts in debtors indicates that leaseholders are in arrears.

Sparklingsea

Hello again
Thanks for the brilliant advice. From googling the management company I can see on the account there are no funds listed so I presume there isn't a sinking fund, also it is unclear as to who is the director now is as I would be buying from the director.
Currently I think the flats are mainly owner occupied but my concern is if they become tenanted.
I think maybe the best way forward would be to probably buy a copy of the accounts and talk to neighbours before proceeding with the purchase and incurring legal fees.
Thanks for your help

MonkeyPower

Sparklingsea wrote: »

From googling the management company I can see on the account there are no funds listed so I presume there isn't a sinking fund, also it is unclear as to who is the director now is as I would be buying from the director.

This is probably too late for your purposes, but it might be of use to others.

A zero balance on an RTM company's accounts does not necessarily mean that there is no sinking fund etc. The accounts held at Companies House are for the RTM company itself. The service charges/ sinking fund are not an asset of the company and a lot of companies therefore submit a zero balance in their company return. This does not indicate one way or the other what money is available for building maintenenace etc.

The service charge fund does not "belong" to the RTM company - it is held in trust for the leaseholders.

I hope that makes sense!