Below is a summary of how different lease structures affect management options.
Two-Party Lease - The freeholder/landlord and the leaseholder/property owner
Where there are only two parties to the lease such as the freeholder/landlord and leaseholder, the landlord will be responsible for management and appointing a managing agent if they deem so and the lease permits. In these circumstances the options are as follows;
· Get the freeholder/landlord to agree to change managing agents.
· Form a recognised tenants association. Formal recognition is required, either directly from the landlord in writing, or by applying to the Tribunal if the landlord is not willing or ignores the association’s request for recognition. The benefits of a recognised tenants association include amongst others to be consulted on the appointment of a managing agent.
· Make an application to the Tribunal to appoint a manager. Appointment of a manager is a ‘fault-based’ right. This means that leaseholders can exercise the right if they consider the management of the block to be unsatisfactory.
· Claim your right to manage. There is no need for the leaseholders to prove mismanagement by the landlord.
· Collective enfranchisement. This involves buying the freehold with your fellow leaseholders. This can be more costly than right to manage and may not work if leaseholders cannot raise funds
It is important to bear in mind that right to manage and collective enfranchisement relates to a building, so, in an estate of separate blocks, each block would need to exercise the right separately.
Unfortunately, there is little to no legislation for freehold houses on private housing estates unlike leasehold properties. Therefore, the options for freehold houses are limited only to approaching the freeholder/landlord asking them to sell you the freehold of the communal areas. This will allow you to take over responsibility, but there’s no right in law for freeholder/landlords to do this.
Tri-party Lease - The freeholder/landlord, management company and the leaseholder/property owner
The good news is that this is the most straight forward option for changing managing agents. The management company is usually responsible for management functions including the appointment of managing agents. The company will be made up of shareholders or members (depending on the company’s articles) who in turn are leaseholders or homeowners, from these there will be a Board of Directors appointed (leaseholders or homeowners who have volunteered to become a Director) who make decisions on behalf of the management company including the hiring or firing of managing agents. The Directors of the company are appointed by and answer to the shareholders or members.
The notice period will depend on the managing agents’ terms and conditions of engagement, however, typically notice periods are three months. It is helpful to have this information to hand prior to giving notice to ensure that any notice given is valid.
Although not widespread there are examples of managing agents named in leases and transfer deeds as the management company. The managing agent does not own the freehold but is written into the leases and transfer deeds when the properties are built, giving control of all the management. This means that leaseholders and homeowners will not be shareholders or members of this company and therefore no involvement in how the development is managed or decisions made. In these circumstances the options are as follows;
· If there is any, meet the provisions within the lease and transfer deed to force the withdrawal of the named managing agent and create a newly formed residents management company.
· Make an application to the Tribunal to appoint a manager. appointment of a manager is a ‘fault-based’ right.
· Claim your right to manage. The building must meet certain conditions and a minimum number of leaseholders are required to take part. There is no need for the leaseholders to prove mismanagement by the landlord.
It is important to bear in mind that right to manage relates to a building, so, in an estate of separate blocks, each block would need to exercise the right separately.
Clients are often concerned about the handover process. At Aspire we have many years’ experience of taking over developments from other managing agents and we know what information to ask for. We will work with the outgoing managing agent to ensure a smooth and stress-free handover with very little onerous on you.
If you are thinking about changing managing agents call us today on 01923 372169 or email pm@aspire-management.co.uk even if it is just for an informal chat to discuss your options.
*This article is not intended to be legal advice.
