By Christopher Last and Naomi Raymond, Legal Advisers
This article originally appeared in News on the Block in May 2011
The most common circumstances in which leaseholders are to be in a position to appoint a manager are:
- the acquisition of the Right to Manage;
- Collective Enfranchisement;
- Where the freeholder is falling short of fulfilling his obligations under the lease and the leaseholders apply to a Leasehold Valuation Tribunal (LVT) for the appointment of a new manager;
- where leaseholders are the sole members of a management company usually under a tri-partite lease.
First and foremost, leaseholders need to consider the management obligations imposed by the covenants in their lease. There is no standard form for these covenants, though it would be fair to expect the freeholder or management company to bear responsibility for repairs and maintenance of the structure and exterior of the building including the roof, foundations and external walls. The role of the managing agent is to discharge those responsibilities where the party responsible feels incapable of doing so themselves.
Management of a building is not a responsibility to be taken lightly, but self-management should be considered. Is their sufficient expertise among the directors and officers of the RTM Company or the freehold company to manage without an agent? If you are asking the LVT to appoint a manager, is a resident capable of doing the job themselves? Do not be afraid to answer ‘no’ to these questions – managing a building can take a great deal of time and effort. If, however, the capacity for complete self-management exists, it should not be ruled out.
Presuming a leaseholder accepts the need to instruct a professional managing agent, here are some factors they should consider:
- Someone who knows the relevant legislation and follows good management practices particularly those set down in the RICS Code of Practice Service Charges Residential Management Code(Second Edition);
- Experience – does your managing agent have a reputation preceding them?
- Trust Locality – It is important that a management company has resources available in your locality;
- Membership of RICS / ARMA – whilst this is voluntary, it is a good sign that the agent is willing to be supervised and regulated.
There will be a cost involved in engaging a managing agent. It is important that you are aware, however, of your liabilities. Through retaining a managing agent under any of the examples set out above, the cost will fall on those instructing the agent, which may or may not be recoverable from all leaseholders under the terms of the lease. It is important to ascertain this before instructing an agent, and if the lease makes no provision for the recovery of the cost consideration must be given to addressing the problem. One remedy may be the variation of the leases to permit recovery of the agent’s fees through the service charges.
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