Advice for Leaseholders: Your Right to Manage Your Block

by Tim Bishop on August 14, 2013

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In the UK, long leaseholders (leaseholders with a lease originally granted for 21 years or more) can attempt to assume management responsibilities for the building they live in if they are dissatisfied with the performance of the freeholder. Leaseholders hoping to do this will first need to set up a ‘Right to Manage Company’ and must ask all other leaseholders if they would like to join the organisation. In order to qualify for the right to manage, the company will need to be made up of at least 50% of the leaseholders. A notice detailing the plans of the company and giving 4 months notice should then be served to the freeholder who will then have 1 month in which to object and serve a counter notice. The Leasehold Valuation Tribunal will be needed if such a counter notice is served.

The freeholder must swiftly hand management responsibilities over to the company once the right to manage [ or RTM] is granted but will retain certain important rights. Most notably, the freeholder will still ultimately own the entire property and will therefore be able to take appropriate action [ ultimately forfeiture] against any leaseholder who is deemed to have breached the terms of their lease. Furthermore, leaseholders will need to obtain approval from the freeholder in order to lease or sub-let a dwelling (which can lead to tricky arguments requiring the LVT). However, all responsibility for maintenance and insurance for example will now lie with the new RTM company.

Right to Manage – the disadvantages

Although the right to manage looks attractive, it can be problematic. The greatest difficulty is enforcement because when a group of leaseholders are in charge, it can create tension when late payments need to be chased or complaints are made relating to noise disturbance for example. Not all leaseholders will happily take orders from a neighbour – however the company may be legally obliged to take action. Getting involved in, say, with a dispute over service charges with other leaseholders can be tough – especially when the flat is your home and the leaseholder involved in the dispute is your neighbour.

Another problem arises from the fact that members of the company are essentially leaseholders giving up their free time to ensure the proper management of the block. This can be easy enough where only a few flats are involved, but in large blocks active management and coordination of maintenance projects can be difficult to coordinate. In particular tensions can develop if some leaseholders are disorganised or fail to keep to their obligations.

Leaseholders may also find it difficult to stay on good terms with their freeholder who retains the right to use forfeiture action [ a process whereby the LVT is asked to end a lease and evict the leaseholder due to a breach of terms]. In order to forfeit the lease, the freeholder must serve a section 146 notice which explains why action is being pursued, what the leaseholder can do to correct things and how much compensation is being sought. Given the significant nature of forfeiture, comparatively few leases are actually forfeited every year – even when a forfeiture action is taken, the leaseholder in question has the right to appeal.

An alternative to the Right to Manage

There is an alternative to exercising the right to manage and forming an RTM company in cases where the leaseholders do not wish to assume management duties themselves but are, nonetheless, frustrated with their freeholder. In the circumstances, the leaseholders in question are entitled to serve a notice stating that an application will made to the LVT to put a managing agent in place unless the freeholder improves. The LVT then has the power to appoint such an agent.

Leasehold property law is a complicated area of the law and it can be difficult to understand the various rights and obligations that leaseholders and freeholders have. Whether you’re a freeholder or leaseholder, if you’re considering taking on the right to manage, make sure you appoint a solicitor with plenty of RTM experience.

Tim Bishop is senior partner of law firm Bonallack and Bishop – specialist UK lease extension, lease enfranchisement and right to block management solicitors. For more information, call them on 01722 422300 or pay a visit to one of their specialist websites at http://www.leaseextensionuk.co.uk , or http://www.enfranchisementsolicitors.co.uk.

Tim Bishop
Having qualified as a Solicitor in 1986, Tim Bishop is a legal entrepreneur who owns law firm Bonallack & Bishop. Find out why you should choose the property law solicitors at Bonallack & Bishop: Visit www.bishopslaw.co.uk.
Tim Bishop

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