What can be achieved?

Tenants should be clear in their objectives before deciding on the appropriate course of action. A management audit is a one-task appointment, to carry out an investigation and then report back to the tenants in the form of an audit. The appointment of a surveyor is ongoing, to assist and advise the tenants as appropriate to their requirements; it continues until formally ceased by the association.

In practice both approaches are likely to cover the same ground and to produce similar results, although the appointment of a surveyor provides greater flexibility.

Examples of matters the auditor could examine include:

• how far the landlord is meeting his obligations under the lease (and the law)
• what procedures and contracts the landlord has for carrying out repairs and maintenance works: how the works are specified and managed, what arrangements there are for competitive pricing, how the work is recorded and how invoices are checked and authorised for payment.
• existing service contracts (for example lift maintenance or gardening) and their suitability and relevance to present needs, the costs and the means of pricing including whether they are tested by competition
• the landlord’s financial systems, particularly how and where the tenants’ service charge money is held, that its trust fund status is clearly established (where this applies) and what happens to the interest
• the general state and condition of the common parts of the building, or estate, to check, for example, on matters of maintenance and contracted services; the cleanliness or the proper functioning of equipment

With this the auditor can provide the tenants with an informed professional judgement:

• is the landlord actually providing the services he is required to
• are the services provided to a reasonable standard
• is the landlord obtaining value for money

The surveyor can, if so instructed, do all of the above. In addition they can carry out other ad-hoc tasks according to the tenants’ association’s specific requirements. These can simply be to carry out annual or quarterly inspections to advise on repairs and management matters or to advise the association on all service charge demands; the appointment may be little more than a retainer to ensure the availability of expert advice when required.

Alternatively, the surveyor may be appointed to provide evidence for tenants, who are members of the association, to challenge their service charges before a First-tier Tribunal (Property Chamber) or, in serious cases, to apply for the appointment of a manager.

Care must be taken by tenants in selecting the appropriate procedure for their building and qualification will count for as much as the objectives to be achieved. There are different qualification criteria for the two rights, together with procedures for appointment, notice to the landlord and relative rights of access.

It must be appreciated that the procedures provide considerable rights for tenants to obtain what may be sensitive information and that these rights arise solely from formal appointment of the auditor or surveyor and proper notice to the landlord in accordance with statutory requirements.

The form of the notices varies in accordance with the nature of the appointment. The appointment of a surveyor is the start of an open-ended arrangement, during the course of which the surveyor may have occasion to require information or rights of access from the landlord; the management audit is a specific investigation with a prospective completion date and commences with direct requests to the landlord for information. Therefore the notice to the landlord regarding the appointment of a surveyor is simply the provision of information; that for the appointment of an auditor is the commencement of a process.

In either case the auditor’s or surveyor’s notices may be served on the landlord’s managing agent but must be copied to the landlord’s official address. Again, both procedures allow for access to documents etc held by a superior landlord. Similarly, where a landlord disposes of their interest after service of the notices, their successor in title will be bound by them and must comply within one month of the date of disposal.

The landlord, or their managing agent, cannot charge for the provision of documents or the facilities provided for their inspection but they may make a reasonable charge for their copying.

However, the landlord can, quite legitimately, add any costs to them arising from the audit or activities of the appointed surveyor to the tenants’ service charges. The only protection here for tenants is that those costs would be subject to the challenge of reasonableness, as other service charge costs.