Right To Manage
Buildings with multiple tenants rely upon service charge arrangements to evenly share the costs of maintaining communal areas between the occupants. Each property will have its own requirements. Whether you live in premises with lots of outdoor space or a high-rise block that requires window cleaning or lift maintenance, sites will need differing levels of attention. Service charges should reflect this.
Costs vary, but generally at some point during a tenancy there will be some disagreement about the level of service. Regardless of whether there is a little or a lot of work to be carried out on the property, it should be maintained to the standard expected and agreed in the tenancy agreement.
If you own an apartment in a building, are unhappy about either the performance of the managing agents, the level of the service charges, or both, there is a statutory procedure that enables you to take control. The Commonhold and Leasehold Reform Act 2002 entitles tenants to the opportunity to apply to take control of the management of the building. As long as more than fifty percent of those living at the premises vote in favour of the proposal, tenants can run the block. This is Right to Manage (RTM).
Within a Right to Manage property, tenants do not stop paying the landlord. It does mean they have more control over how and where the money is spent.
Inevitably, this means more effort having to be made on the tenant’s part: Finding someone to cut the grass or clean the windows becomes the collective responsibility of those living in the building but it does give tenants the opportunity to reduce costs and improve the work carried out.
Often, grievances about quality and cost of services lead tenants to consider taking over building management. These can be highly emotive issues. It is well worth taking time to consider the alternatives to Right to Manage:
- Complain – Investigate the complaints procedure of the managing agent. It is almost always more cost effective to raise your concerns outside the courts in the first instance, whether you get a satisfactory response or not.
- Replace the agent – Consider applying to the court for a new managing agent. It takes time and organisation on the part of all of the tenants to manage a building successfully. If you are unhappy with the levels of service of your current managing agent, you may find it easier to simply appoint a better one. The Leasehold Valuation Tribunal covers disputes on service charges as well as rental and sale valuations.
- Bring a claim – If the management has been generally satisfactory and there is a specific grievance it may be more effective to bring a claim solely based around one issue.
Considerations before entering into a Right to Manage
However, if these options do not find favour with you or other tenants, try to take a practical view on what will be required to exercise your right to manage:
- Is the building suitable for Right to Manage – The first thing tenants must be sure about is the building is physically suitable for Right to Manage. The division of apartments, the layout of the building and its relationship to other buildings may make it impossible to apply. Although this is rare, it is well worth checking well in advance of any action.
- Consensus – It can create tensions within the building if there are strong disagreements over both the management of the building and, once tenant managed, the costs and quality of the same services. Although you only require fifty percent of the tenants in the building to agree, good relationships between the majorities of the tenants are highly desirable. This sometimes means Right to Manage can be easier for smaller groups of tenants.
- Equitable division of responsibilities – Whilst making an effort to save costs it is possible one or more individuals end up taking on a greater share of the burden of management responsibilities. Again, this is easier to avoid with good relationships and communication between all tenants and can be easier to accomplish in smaller buildings.
- Quantum of savings – Managing the building does not free the tenants from their obligations to the owner of the building. The Freeholder of the property will require certain levels of services and maintenance. Tenants, just as their previous managing agent, will be legally bound to comply with these within a Right to Manage arrangement. Tenants should create a realistic budget versus those requirements to make sure they will be able to supply a better level of service at the same or a lower amount. Large management companies may well have arrangements on prices with their contractors because of the amount of work they can provide them with.
Notwithstanding the challenges, countless groups of tenants reap the many rewards of managing their building themselves, from reducing service charges and improving the quality of service to relaxing restrictions on internal changes and decoration.