The appointment of a manager

These rights are set out in Section 24 of the Landlord and Tenant Act 1987.

Where the management of a property by the landlord is considered unsatisfactory by the tenants, and the tenants are unable to exercise the right to manage and there is no other remedy available to the tenants which is likely to achieve any improvement, they may apply to the Leasehold Valuation Tribunal (LVT) for the appointment of a manager.

Where the right to manage under the Commonhold and Leasehold Reform Act 2002 has already been exercised but the management is unsatisfactory, application may also be made for appointment of a manager, effectively terminating the right to manage.

Provided the LVT is satisfied that the case warrants such action, it may make an order to displace the landlord’s control and management arrangements with a manager named by the LVT. This manager need not be a managing agent, but could be a lessee or other responsible person. The manager could delegate tasks to a managing agent, but ultimate responsibility remains with the manager appointed by the LVT.

An application must cover the whole, or part of, a building containing two or more flats. The application may be made by any one tenant or by a group of tenants acting together.

However, the right to seek the appointment of a manager from the LVT is not available where the landlord is a local authority, an urban development corporation, a registered housing association, a fully mutual housing association or a charitable housing trust. It is also not available where the landlord is resident on the premises and it is a converted (not purpose-built) property and less than half the flats are let on long leases.

The LVT will make the order if it is just and convenient in all the circumstances and at least one of the following applies:

• any relevant person is in breach of an obligation to the tenant, under the terms of the lease, in relation to the management of the building
• unreasonable service charges have been, are proposed or are likely to be made, or unreasonable variable administration charges have been made, are proposed or are likely to be made. It is not necessary for the service charges or administration charges to have been determined as unreasonable through separate 1985 or 2002 Act applications (although such a determination would provide useful evidence)
• the landlord has failed to comply with any relevant provision of an approved code of management practice. The reference to approved codes of practice relates to approvals under Section 87 of the Leasehold Reform, Housing and Urban Development Act 1993. Two codes of practice have been approved, one produced by the Association of Retirement Housing Managers relating, primarily, to purpose-built retirement housing, and one by the Royal Institution of Chartered Surveyors which is relevant to all residential leasehold property where service charges are paid. Copies of the codes are available direct from the relevant bodies
• other circumstances where it is just and convenient

The right to seek the appointment of a manager applies equally where the lease includes a third-party manager. In this case all notices must also be served on the manager under the lease.

Application Form – Appointment/Variation/Discharge of a Manager

Before any application is made to the LVT for the appointment of a manager, the tenant must serve a preliminary notice (under S22 of the Landlord and Tenant Act 1987) on the landlord and any other person who is under a duty in respect of management. The notice must state:

• the name and address of the applying tenant (and an address for the service of notices if different)
• that the tenant intends to seek an order, but may not do so if the requirements set out in 4 below are complied with
• the grounds on which the order will be sought, and the matters which will be relied on in establishing those grounds
• those matters that are capable of being remedied, and that they should be remedied within a reasonable time limit which is specified in the notice

If the landlord fails to remedy the matters set out in the notice, or if there are other grounds, then the tenant may proceed with the application to the LVT.

Tenants may apply to the LVT for an order to dispense with the preliminary notice where the LVT is satisfied that it would not be reasonably practicable to serve it. The LVT may direct the tenants to take some other appropriate steps, prior to considering the application for the appointment of a manager.

The intention of the preliminary notice is to allow the landlord fair warning of the tenants’ wish to replace their management and give the landlord an opportunity to make good their deficiencies. Tenants applying for a dispensation will need to satisfy the LVT, through evidence, of the impracticability of serving the preliminary notice.

The applicant is required to nominate the person of their choice to be appointed as manager, although the appointment will be entirely within the discretion of the LVT. This may be a professional manager. If an appointment is made, that person or company will manage the premises in accordance with the order of the LVT.

The form and regulations require the qualifications of the nominated manager to be given. This should not be taken to mean that the nominee must be qualified property manager. If the nominated manager has qualifications they should be shown, but the absence of qualifications is not necessarily an obstacle to appointment, although each case will depend on its own circumstances.

The applicant is required to nominate the person of their choice to be appointed as manager, although the appointment will be entirely within the discretion of the LVT. This may be a professional manager. If an appointment is made, that person or company will manage the premises in accordance with the order of the LVT.

The form and regulations require the qualifications of the nominated manager to be given. This should not be taken to mean that the nominee must be a qualified property manager. If the nominated manager has qualifications they should be shown, but the absence of qualifications is not necessarily an obstacle to appointment, although each case will depend on its own circumstances.

The LVT has wide discretion in the making of the Order, the matters to be included and the conditions to be imposed. The Order may make specific directions in certain matters or provide procedures for subsequent applications by the new manager to seek directions.

The Order may include provision:

• for the appointment to be temporary or without a time limit
• for the manager’s costs and fees to be paid by the landlord, the tenants, by any relevant person, or a combination of these parties
• for the manager to be entitled to pursue claims relating to actions prior to their appointment
• for the manager to assume rights and liabilities relating to contracts even though they are not party to them

In effect, the Order will provide the manager with the level of authority that the LVT considers appropriate to enable them take control of the management of the building. The manager is responsible to the LVT and is not required to seek or accept instructions from the landlord or from the tenants.

Once the new manager is appointed, the landlord ceases to have management control over the building to the extent set out in the Order. The LVT can require the landlord to provide all necessary documentation, accounts and other information to the new manager as is necessary for the management of the building.

The LVT may, on the application of any interested party (including the landlord or the tenants, and including those tenants who were not party to the original application) vary or discharge an Order of Appointment. If the Order is discharged, the management will revert to the landlord. In varying or discharging an Order, the LVT will need to be satisfied that by doing so it will not lead to a recurrence of the circumstances that led to the original Order, and that it is just and convenient in all the circumstances to do so.

Where a landlord is in breach of an obligation under the terms of the lease and it is likely to continue, or where a building has been subject to the appointment of a manager pursuant to Section 24 of the Landlord and Tenant Act 1987, the qualifying tenants may make application to the High Court or county court for an Acquisition Order to acquire the landlord’s interest.

Where the application is based on a manager having been appointed under Section 24, the manager must have been appointed for no less than two years on the date of application to the court.

A preliminary notice must be served on the landlord by the tenants before an application can be made to the court, unless the court agrees to dispense with the notice.

The court’s Order for Acquisition is subject to conditions that, amongst other things, there are two or more flats, that at least two-thirds of the flats in the building are held by qualifying tenants, and that the requisite majority of qualifying tenants make the application. Further advice should be sought before this option is pursued, as there are exceptions.

If the Order is made by the court, the LVT will determine the terms on which the landlord’s interest may be acquired (including the purchase price) unless they have been agreed between the parties involved.