We own the freehold. How can we sack HLM?

Jacquetta

Hi,

Our problem is simple, but the solution seems very complex! We are an estate of around 30 homes; half leasehold flats (Walton Homes own the leasehold), and half, like mine, are freehold houses.

It seems that if all properties were leasehold, we could set up our own management company under Right to Manage. The problem is, as freeholders, Right to Mnage does not apply.

I have tried, desperately, to change to another company, but HLM think there’s nothing we can do, and continue to provide little, or no service. We are all frequently ignored and only have small requests (like trimming bushes or changing bulbs in the street lamp!)

I have complained to HLM, escalated it to their management, escalated it to Walton Homes management (who own the private drive we live on) and been completely ignored.

What on earth can we do to sack HLM and appoint a new agent?

AdrianC

I think you're misunderstanding what you actually own. Your house is freehold - and HLM have nothing to do with that. But you also have a lease over the estate common areas, which are leased from Walton, who use HLM to manage.

You need to read the lease for those common areas.

Jacquetta

Ah, ok. So would that mean that we could sack HLM and form our own management company under Right to Manage?

eddddy

TBH, I doubt that you have any kind of lease over the common areas.

More likely, you have a contractual agreement to pay estate charges. You need to check the terms of that agreement to see what you are required to pay.

(Here's a bit of explanation by a law firm: http://www.solegal.co.uk/estate-rent-charges-beware-buying-freehold-homes-private-estates/)

As you say, as a freeholder, you have fewer rights than a leaseholder.

On the plus side, there are government proposals to give freeholders the same rights as leaseholders - but that may take some time.

(See: https://www.boyesturner.com/article/proposed-improved-rights-for-freehold-owners-on-housing-estates-to-challenge-service-charges)

rtho782

Yes, this will be estate charges, you will have no right to challenge them in any way, and they can basically charge whatever they like. If the director of the management company decides to pay his brother £1,000,000 to cut the grass, well tough, you have to pay for it.

It's an awful system and why I would never touch a house with estate charges tacked on.

NeilCr

rtho782 wrote: »

It's an awful system and why I would never touch a house with estate charges tacked on.

I've lived in two and it's been absolutely fine. In both cases the residents owned the freehold and ran the management company (employing an MA).

I do think you need to do your research, though, into who wins the freehold and how it is run.

AdrianC

eddddy wrote: »

TBH, I doubt that you have any kind of lease over the common areas.

More likely, you have a contractual agreement to pay estate charges

Yes, sorry - my bad pre-sufficient-tea wording. I was trying to stress that the management of the common areas was simply separate from the freehold house.

Jacquetta

NeilCr wrote: »

I've lived in two and it's been absolutely fine. In both cases the residents owned the freehold and ran the management company (employing an MA).

I do think you need to do your research, though, into who wins the freehold and how it is run.

Thank you. How did you get to run the MA? As in, did you sack an existing one first?

moneyistooshorttomention

rtho782 wrote: »

Yes, this will be estate charges, you will have no right to challenge them in any way, and they can basically charge whatever they like. If the director of the management company decides to pay his brother £1,000,000 to cut the grass, well tough, you have to pay for it.

It's an awful system and why I would never touch a house with estate charges tacked on.

There is a fallback system, as I understand it, of if someone tries to charge an "unreasonable" charge for work - then the home-owners can go to court and the court decides if the proposed charge is "reasonable" or no (and I believe they have information to hand of sample charges to help them judge if there is an attempt to overcharge for any work). So someone can, possibly, get away with going in for nepotism (eg 3 quotes are from their brother, their cousin and their son) - but can't charge more than is "reasonable" - as the legal means are there to challenge them (though the law is still currently awaiting updating to avoid any risk of having to take a managing agent/whoever to court instead).

That's how it works with unadopted roads anyway - so am guessing it's the same fallback position for an "estate" with "management" in place.

NeilCr

Jacquetta wrote: »

Thank you. How did you get to run the MA? As in, did you sack an existing one first?

Sort of.

The builder gave us the freehold. He was running down his business and didn't want any hassles. He is a good guy, still lives on the estate and is one of the directors now.

We inherited the MA but the relationship was a bit fraught. At a meeting things got heated and the MA sacked us! We then appointed a new one. Over the years they have been taken over a couple of times and we now have a very large company.

Frankly, they aren't much good. We have given them notice and have a medium size company taking over in June.

Being in control is great - you can get things done yourself and you can set the budget etc which, obviously, impacts on service charges. But you do have to have the right MA ( finding that is an art) and, if you are a director, residents tend to come looking for you when things go wrong.

ETA

Have you, as a group of residents, had any conversation with Walton Homes about obtaining the freehold. I don't know how big they are but I have been involved in two new estates (one flats only, one flats and houses like yours) and both builders were quite happy to let the residents have the freehold. They were both small builders

The first one (flats only) gave us first refusal for buying. The second one - see above.

You'd need concerted action, though. In my experience, most residents aren't over bothered about who owns the freehold. In the first development I know, as my friend lives there now, that they can't get anyone to be a director.

eddddy

moneyistooshorttomention wrote: »

There is a fallback system, as I understand it, of if someone tries to charge an "unreasonable" charge for work - then the home-owners can go to court and the court decides if the proposed charge is "reasonable" or no back position for an "estate" with "management" in place.

It sounds like you are talking about leasehold service charges, not freehold estate charges.

The Landlord and Tenant Act 1985 states that service charges for Leaseholders must be 'reasonable'. There is no similar protection for freeholders.

Hence the government proposals I mentioned in post #4.