Manage your Block

Flat owners may gain management responsibility in various ways, for example, by purchasing the freehold, through Right to Manage (RTM) or simply by delegation of the management responsibilities from the landlord. Whatever the route, the management is normally exercised through some form of resident management company (RMC).

The RMC will assume responsibility for the management and repair of the building, and for compliance with the requirements of the lease, plus many statutory requirements.

The choices The RMC has is to self-manage by a formed Committee or by the appointment of a professional managing agent.

ARMA is the leading trade body in England and Wales that focuses exclusively on matters relating to the block management of residential property, whether for landlords or resident management companies. Members agree to adopt and comply with the principal objectives of the Association and undertake to follow the Codes of Practice issued by the Royal Institution of Chartered Surveyors. The Association promotes and encourages consistent standards of practice by its members and provides a platform for developing and contributing to public debate on new legislation concerning management issues.

Residents' Management Companies

Many leaseholders do manage their buildings themselves, with this they acquire the same responsibilities that the landlord has. Leaseholders should be aware of the work required and their obligations to all shareholders, flat owners and the freeholder.

Leaseholders considering self-management should appreciate that this will not provide them with additional freedom as they still are governed by the restrictions and requirements both of the lease and the relevant legislation and codes of practice whilst making management decisions.

The task of management for an RMC is an onerous task, which requires a committee with sufficient members to provide an effective management structure. Director and Company Secretary positions are usually unpaid and rely on a number of reliable members.

Committee members will be required to fulfil their duties, which can be challenging at times.

Duties and obligations

Management of a residential block of flats is a largely practical exercise and demands considerable effort, with meticulous approach and care. The building must be regularly inspected, maintained and redecorated to the required standard and at the required times.

Budgets must be prepared and monies collected for the works. The RMC will need to appreciate exactly how the Lease operates to ensure how the building should be maintained and how the lease permits the charges to be raised, in advance or arrears.

There are requirements to provide final accounts and the annual statutory summaries to all leaseholders.

Although the company is the landlord, the accounts must clearly distinguish between the financial affairs of the company and those of the landlord. In cases where a resident is in default of his or her lease, in non-payment or arrears of rent or service charges or in breach of a clause of the lease controlling the use of the flat (subletting, for example), the RMC will be required to take action; this can include threat, or ultimate use, of forfeiture and possession proceedings. RMC’s may feel uncomfortable in direct action against a fellow leaseholder/flatowner and consider such actions better carried out by an independent professional.

Leaseholders should choose self-management only where they have a complete understanding of the scope of their role and responsibilities and they must have or acquire the facilities and resources to undertake the task properly. The building is, after all, an investment of many shareholders.