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Changing managing agent – time for flight without the fight?

Changing managing agent – time for flight without the fight?
21st April 2017 Editor

Is it time to give leaseholders a new and non-adversarial route to replacing their managing agent? Ian Hollins of Clear Building Management asks for an alternative to Right to Manage and Appointment of a Manager.

Many of the frustrations involved in owning a leasehold property come down to a simple lack of control. I know, having lived in a flat for most of my adult life and spent the best part of two years waiting for the then managing agent to fix the lift – and wondering just how exactly my service charge was being spent.

You want to improve things, to have a say in how your development is managed, but bringing about this change can be difficult, expensive, and involve some unpleasant battles.

Unless you and your fellow leaseholders have a resident owned management company written into your lease or own the freehold (in which case, bravo – you can change agent simply by terminating the contract), you will need to follow one of two routes to replace your managing agent: 1) apply for the right to manage, or 2), go to the Tribunal for appointment of a manager.

Each route has its pros and cons from both a practical and a legal perspective.

Right to manage

Since its introduction in 2002, RTM has been by far the more popular for leaseholders wanting to switch managing agent and take control of their block. Indeed, many leaseholders we speak to have it fixed firmly in their minds as being the only option.

The main advantage of right to manage (RTM) is that there is no need to prove any ‘failure’ by the managing agent. Providing you have the support of at least 50 percent of leaseholders and your block meets the criteria for RTM, then nothing can stop it. These criteria include the requirement that block must be a) at least 75% residential and b) capable of vertical division – ie: not linked to another development.

The trouble is that it is becoming increasingly difficult to meet these two criteria – particularly in new-build developments.

As we have written previously, cynical developers understand the fine margins in the RTM criteria and deliberately create blocks that just exceed the minimum 25% commercial requirement, or have shared facilities, such as an underground car park across two blocks, so the RTM route is effectively closed off from the start.

And, if you apply for RTM without a watertight case and the landlord defends it, then the costs can really start to escalate. (Note however that a good managing agent would be able to support you through the process and confirm that your block does meet the criteria before proceeding to a right to manage application.)

Appointment of a manager meanwhile is a fault-based route to replacing the managing agent.

Leaseholders can apply to the tribunal for appointment of a manager and, if the application is successful, the tribunal will appoint a new agent to achieve the block management objectives. It doesn’t need majority leaseholder support but the application does have to demonstrate how the managing agent or freeholder is failing the block.

Note that whilst it can be brought be a single leaseholder, generally the tribunal considers this type of ruling as a draconian measure so will want to understand and be satisfied that there is support from within the block to ensure that it isn’t in the hands of one ‘maverick’ resident.

Unlike RTM, where it’s a more straightforward qualification process, appointment of a manager decisions are firmly in the hands of the tribunal chairman and panel, so can be hard to predict. It can also be a highly confrontational process.

Our view?

Leasehold properties will continue to play a key role in the UK housing market. We either need the developers to ‘play fair’ or for the law-makers to consider another option for those residents blighted by poor service and unable to make the change: a third way Is desperately needed.

We propose that the simplest option would be to allow leaseholders, where RTM is not an option, to exercise the right to change managing agent by appointment of a manager via tribunal – but without needing to prove fault.

In exchange, we suggest that the application to the tribunal must have the support of at least half of the leaseholders – as with right to manage.

The appointment of a manager process already exists, is fairly straightforward and would mean both the leaseholders and the freeholders would have some reassurance that the agent was accountable via the tribunal.

A non-fault based option would remove the adversarial aspect that is understandably so daunting for leaseholders, and deal with the challenges laid down by developers, this simple solution is fair, achievable and fills a big gap in RTM legislation.

If you are a leaseholder looking for a fresh approach to property management, contact Clear Building Management on 0333 344 4996 or click here to send us an online enquiry.

This article first appeared in Flat Living Magazine. Click here to view it.

Clear Building Management – managing agents with a difference.

Clear Building Management was founded on the principles of transparency, value and quality to deliver professional residential development management in a better, more inclusive way ensuring customers and their needs are at the heart of its operations.

In July 2016, we were awarded the Customer Service Excellence award by the Cabinet Customer Service ExcellenceOffice, making Clear Building Management the first private property management company to be recognised with this award.

If you are a leaseholder or RMC director looking for a fresh and transparent approach to property management then we would be very happy to speak to you.

Click here to contact Clear Building Management