RTM- please can anyone offer advice that have done this?

amy622

Hello, 

I own a leasehold flat in London, within  a small development,  with 5 flats in total. We are very unhappy with our management company, generally they are very slow and within less a year of moving in, our management company has DOUBLED the service charge and moved forward the budget year. 

So due to this, myself and the other leaseholders are considering RTM- I was wondering if anyone else has done this? (either managing the building directly or appointing a management agent to do so?) 
Would you recommend to others in a similar situation?
 Any advice regarding this would be greatly appreciated. 

Thanks Amy

eddddy

I guess you've thought a lot about the potential benefits, so I'll mention some of the potential downsides...



Maybe the starting point is to consider that you will have 5 'strangers' / 'amateurs' trying to work together and make decisions about managing a building.

For example, some might want to spend thousands a year keeping the building looking pristine; others might be a bit short of cash (or less 'house proud') and want to spend the minimum possible on the building. (That's the exact challenge I'm having with an RTM company.)

The early disagreements might include:

• Hiring a management company vs doing it yourselves

• Which management company should you hire (cheap and cheerful vs expensive and super-professional, etc)

• Should you have a sinking fund

I'd certainly recommend hiring a management company. But what if you hire a management company...

• Who double their management fees every year

• Charge leaseholders outrageous fees for management packs, consents, late fees, etc

• Doesn't get repairs done in a timely way

So ask other RTM companies for recommendations - and check contracts in detail, including stuff like notice periods for sacking them, etc.



And are you, as a group,  prepared for the difficult stuff like when a neighbour says "We've just had a baby, and I've been made redundant, so I can't afford the service charge for fixing the leaking roof."?

Would you instruct the Management Company to take legal action against the neighbour (and maybe send in bailiffs); or would you pay the neighbour's share; or would you leave the roof leaking?


Also, bear in mind that as and when flats are sold, the new owners will become members of the RTM company. And you don't know what they will be like.

amy622

Thank you that is very helpful. I agree with all your comments regarding drawbacks of RTM. Would you have any idea how to go about getting recommendations for management agents from RTM companies?

cheap-information

We are a block of 7 flats in London. We had similar issues - for instance our managing company was paying 300-400% of the going rate for buildings insurance. Also, they hired electricians to change batteries in smoke alarms instead of paying me £2 for a battery and changing it myself.

We went RTM 5 years ago and haven't looked back. I manage the building myself and the other leaseholders pay me for my time. Even with this, the costs are around 50% of what they would be overall. The main savings aren't really the management charges but the flexibility you can have if needing a contractor and choosing insurance policies. There's a bit of work in regards to building/fire safety and raising invoices for the leaseholders but never had too many issues. A nightmare would be a non-paying leaseholder but we've never had this.

I'd definitely recommend. A 5 flat block should be manageable yourselves in reality - you may have difficulty finding many agents to take it on due to the limited profit they could pull.

eddddy

Obviously, experiences with RTM companies can vary widely. Here's another experience...

The directors of the RTM company were a bit clueless about leasehold legislation, leases and building maintenance. So they rely on their  management company to tell them what to do....

• According to the legislation, x, y and z needs to be done - would you like us to arrange it?
• According to the lease, the building is due for external decoration - would you like us to arrange it?
• In our 6 monthly inspection, we noticed that a and b needs repairing - would you like us to arrange it?
• A leaseholder has reported that c and d needs repairing - would you like us to arrange it?

And the management company also do things like...

• Ensure that Service Charge demands (bills) are sent out in a valid, legal format
• Carry out section 20 consultations when required
• Produce annual budgets to support demands for service charge payments in advance
• Maintain detailed accounts

There's a huge pile of leaseholder protection legislation - which means RTM companies have to jump through lots of hoops to do things according to the law.


If all the leaseholders "play nicely"; pay bills voluntarily without the need for enforcement; don't complain about technical errors and small mistakes, etc - then you can potentially ignore a lot of the legislation 


It's a bit like when a group of people go to a restaurant and need to settle the bill...

• Some people might be happy to bung in £50 - based on somebody else's "back of a napkin" calculation.

• Other people might insist that you analyse every item on the bill - and do a forensic calculation of what is owed, etc

In simple terms, the law says a leaseholder might not have to pay some or all of their service charge, if the analysis / calculation etc isn't done and reported according to the legal requirements.

eddddy

amy622 said:

Would you have any idea how to go about getting recommendations for management agents from RTM companies?

One approach would be to ask Management Companies for references - i.e. 1 or 2 of their other clients who would be happy to talk to you about their experience with the management company.

(Obviously, they will propose their happy clients, rather than their unhappy clients. But a bad management company might not be able to find any clients who would say good things about them.)

You could also ask them what other buildings they manage, and take a look at them to see how well they are maintained, etc. You could even knock on leaseholder's doors to ask about the management company, if you wanted.

amy622

Thank you! You have been a great help, really appreciate it 😊

amy622

cheap-information said:

We are a block of 7 flats in London. We had similar issues - for instance our managing company was paying 300-400% of the going rate for buildings insurance. Also, they hired electricians to change batteries in smoke alarms instead of paying me £2 for a battery and changing it myself.

We went RTM 5 years ago and haven't looked back. I manage the building myself and the other leaseholders pay me for my time. Even with this, the costs are around 50% of what they would be overall. The main savings aren't really the management charges but the flexibility you can have if needing a contractor and choosing insurance policies. There's a bit of work in regards to building/fire safety and raising invoices for the leaseholders but never had too many issues. A nightmare would be a non-paying leaseholder but we've never had this.

I'd definitely recommend. A 5 flat block should be manageable yourselves in reality - you may have difficulty finding many agents to take it on due to the limited profit they could pull.

Thank you that is such a massive help. I think some of the other flats are not keen on the idea atm, as they feel its a huge undertaking and best to leave to management companies who have the know how, but as you have said its the flexibility and control you have on the services/costs for the building. 
Could I ask how you went about charging the other leaseholders for your time to manage?

eddddy

amy622 said:

Could I ask how you went about charging the other leaseholders for your time to manage?

You need to check the leases to see if they allow management costs to be added to the Service Charge. If they do, you can include the cost in Service Charge bills.

If the leases don't allow it - you have to ask leaseholders to pay management costs voluntarily. If they refuse, you cannot force them to pay.

Here's some relevant info: https://www.linkedin.com/pulse/rtm-recovery-management-costs-through-service-charge-asiimwe-balinda/