Are you confident that your managing agent has your best interests at heart? If you are one of the many leaseholders living in a development with a freeholder-appointed managing agent then the answer may well be a firm ‘no’.
Ian Hollins of Clear Building Management sets out the benefits of appointing your own managing agent, and explains that the process need not be as time consuming nor as complex as you may fear.
Many leaseholders are willing to put up with poor service or inflated service charges because they fear that the process of appointing their own managing agent will be too difficult and/or will become a major drain on their limited time and resources. However, whether you are a leaseholder in a large or small block, getting rid of the freeholder-appointed managing agent for one that is answerable to you the leaseholders can be a lot easier than you may think.
Options for removing a managing agent
Most leaseholders will be aware of ‘Right to Manage’ or RTM. Right to Manage gives leaseholders the chance to take over management of their development by setting up an RTM Company. This RTM Company can then appoint a new managing agent to manage the development.
Right to Manage offers the greatest degree of control and you don’t need to prove any ‘fault’ on the part of the freeholder or existing managing agent. You do however need to secure the support of at least half of the leaseholders and the building must be structurally self-contained, with no more than 25% commercial space.
For bigger blocks however, you may need to pursue alternative options such as Appointment of Manager. This process can be led by just one leaseholder (although the more the better!) and involves applying to the First-tier Tribunal to ask the Tribunal to appoint a new managing agent. This can work well for bigger blocks where the process will be realistically led by just a small proportion of the leaseholders.
Appointment of Manager does however need to prove an element of fault or breach of obligations by the current managing agent and/or freeholder. This can relate to the management of the building, the reasonableness of the charges, or breaches of the relevant codes of practice.
One often-overlooked option is to join the board of the Resident Management Company. If the RMC is still owned by the developer, there is usually a clause that transfers control to the owners on sale of the final unit. In our experience this is usually the least painful route and simply needs an owner who is prepared to become involved!
Additionally, you can seek to vary the lease or approach the freeholder for a change of agent. Both of these need support and are more difficult to achieve without the support of a substantial majority of leaseholders.
We have our new managing agent. What benefits can we expect?
During the managing agent beauty parade you will have had the chance to talk about your development and how you would like it to be managed, and the prospective managing agents will have highlighted their approach and the benefits they can bring.
By setting expectations and goals early, you and your fellow leaseholders should derive clear benefits in the following areas:
- Elimination of any commissions or over-riders paid to the manging agent or its contractors
- Control over decision making
- Reassurance that your service charge monies are being spent effectively
- Confidence that the managing agent is working for you, not the freeholder
How much time will we need to invest?
There will inevitably be a small amount of time required upfront to build a relationship with the new managing agent and to ensure that processes and procedures are set up effectively. However, once the relationship is underway, we would suggest that RMC directors should need to spend no more than two hours each per year in managing the relationship.
Yes, just two hours. Sounds almost impossible doesn’t it?
By having a managing agent that is working in YOUR best interests and with your development’s agenda first and foremost then your role should be one of oversight alone. The ‘doing’ should rest with the managing agent, with key decisions being brought to you as necessary.
We encourage all leaseholders who are struggling in developments that are being poorly managed or with excessive service charges to take a close look at the freeholder – managing agent relationship. And, if you feel that the building is not being managed with your best interests at heart, take action! Appointing your own managing agent may be the best decision you will make for your block and your peace of mind.
