Require Right to Manage Advice

GiGicat1

Hi everyone, 

Newbie here asking for desperate advice.
I am a Leaseholder, one of four flats. We have a service management company, who are charging us exorbitant charges for hardly any decent service. When any work is done, it's poor & the contractors appointed are 'cowboys'. When I complain, I am always 'Gaslight' that the repairwork is done properly!!
I want to sell my flat but its impossible with the high service charge. Therefore, I hope someone could advise me how to go about replacing the Service Company & replacing it with The Right to Manage. Just to say the property was under the Right to Manage when I purchase my flat over 30 years ago. Long story on how it was transfer to this company.
I  have spoken to the owners of the other flats and they are happy to get the process going. 

I appreciate all your advice & assistance.

 

 

gm0

There are four of you.  You need a solution sized to your situation and communal things on your site. 
Quite possibly self managed as small.

Charges are a mix of "stuff" - callout rescue for lifts, inspection, fire checks, building insurance and "works" - maintenance (good or badly done - often badly due to zero supervision which admin agents are not skilled in nor usually contracted to actually do).  And the agent fee which you can go after.  And yet you now need the RTM company to keep records, chase contributions, budget and send service charge and other notices, and do accounts - to some level.  The agent may have been doing (some) of that - well or badly.  Now you have to - split across the four based on prior skills.

Freeholder core obligations to do stuff won't go away with RTM (or share of freehold).  If it's legally required you don't get to skip it and some things are just sensible as well.  Fire checks. Building insurance.  Callout for stuck in the broken down lift.  

If you put free work in to supervise contractors better - the value for money e.g. of painting may improve.  
But in acting as manager for the freeholder commissioning works - legally you cannot just use cheap early odd job retiree fred cash in hand with no public liability insurance and no vat. Well you can but you are opening yourself up to some serious liabilities if something bad happens.  Once you use "normal" contractors.  Will prices for stuff be that different.  Better supervision - leads to possibly better outcomes.  Does it lead to cheaper.  Maybe. Maybe not.  Effort from you for the reward of seeing it done right.  Unpaid effort.

Or you go RTM appointing own agent managed if that's what you choose.  The choice matters.  

As the element of service charge to pay for an agent - which will not be small. 

Is the purchase of a shared service.  It's not zero effort to procure and contract that service from your RTM company - which the freeholder does currently.  But once done the directors (some or all of the 4 leaseholders) now have to "supervise and review" not DO all the work items. What the balance is depends on how many things need looking after.  And how old they are.  Less work. Not zero work.  With 50 leases you likely need an agent with RTM and SOF. With 4 you have a choice. 

Doing the work - insurance, fire inspection, some aspects of works and maintenance, grounds and gates and lift contracts etc. Fob admin. Communal plumbing,  power, satellite whatever it is. Is more work. Which four owners could indeed split and collaborate to do effectively and keep records between them to ensure continuity. Easy with cloud storage these days so long as everyone is cloud friendly.  

And save the agency contract money.  But you have to keep doing it as people come and go.  And it can go wrong if one person does it - and then dies inconveniently and their executor pays a flat clearance company and all the paper records disappear.  And the online ones are locked away under an id (not so shared) and need reconstructing from the correspondence shared with the others.  Gets messy.

Now - you can form a company and shape it to do it collectively.  

Which effectively requires each leaseholder to be a director.  All four.  All the time.  Some may balk. Some won't like the obligation and commitment to time and meetings baked into it - hoping to leech along for the ride.  

But as leases roll over you can - easily - end up in the situation where 2 are a bit willing but "my way or the high way" on their take on what to do - minimum spend or keeping things up. And fighting -  and the other two are not interested in playing at all. Or the drama. Not wishing to take sides. Disengaged.  So what now.

Forcing ALL four to play (or at least strongly incentivising that participation).   Helps with the little napoleon - I'm in charge here resident - or a fighting pair.  If all four are already in the zoom/room.  As directors.  People won't enjoy it.  But the company can vote - there and then - subject to attendance and to the threshold you ALSO put in the company articles (3:1 is a valid decision - or perhaps consensus - your choice again - with consequences).  

Appointment of proxies by leaseholders with an interest in the RTM has to be allowed to cope with sickness and incapacity to act.  Having the responsibility to either do it or appoint one - is still a healthy discipline.  Or you can end up with 2 people willing but unable to act. And two incapacitated with families who have - other priorities and no obligation to ease your organisational woes.  Plan for rain. Not the sunny day.

The point of this "example" is to avoid the situation where

Current owners think RTM is an effort free lunch.  

You want rid of the current agent but don't want to put effort it. And don't want to pay an agent and do the contracting work.  All these things can be true at the same time.  People like a free lunch.

Eventually a freeholder dispute ariese over items that the RTM "must" do to discharge freeholder obligations to leases and which are not being done by the RTM.  A new owner goes after the actual freeholder - who then comes after the RTM company.  Obligations by going RTM you have taken on.  Or you later buy the freehold into the RTM company you setup (negotiated or statutory route).  Now truly on your own.  Nobody else involved. But same leases, same stuff, same legal backdrop to processes.

So the time to get the company setup to match the reality of the site (what needs to be done, how much, how often) is upfront.  Maybe you never buy the freehold.  Perhaps later leaseholders hire an agent.  Perhaps they don't.  

My strong advice is begin with the end in mind.  

I cannot advice on specifics of the wresting away of control for RTM as haven't done one recently.  Family live in an established SOF with sucession planning woes.  But the same basic concerns.  High service charges are offputting.  Agents cost money.  And deferred maintenance growing larger - doesn't mean charges will be smaller later or for long.

Good luck

ExEstateAgent

The lease advice website will detail what you need to apply for Right to Manage. As above, you still do need to manage the building and adhere to the requirements of the leases. 

Service charges for a small block will often be higher as the managment company will want £X for their costs alone which may not be much different for 4 flats or 20. The only way around this is to self manage but people need to do the admin work and ensure compliance with the various regulations. 

It might also be worth looking at buying the freehold - it doesn't change anything re. management but gives you more power over decision making as well as increasing the value of the flats (and extending the leases if needed at the same time to avoid costs down the line).