Leaseholders! You CAN change your managing agent. This article explains how. Many leaseholders don’t realise they are in charge and can bring in new management. Too many assume the management comes with the block.
Getting rid of poor property management companies is not easy. If it were you wouldn’t be reading this. Before we get to the action plan we need to agree first principles: what exactly is bad management? Time and time again it’s the same issues. Over to the Aaagh!-ometer.
|Failure to answer the phone and respond to messages
|Lack of onsite presence
|Unclear service charge bills
|High insurance premiums
|Poor day to day services like gardening and cleaning
|Not knowing where your money goes
If your blood is beginning to boil – it’s no surprise. Unfortunately these issues are common. The list reflects our experience as an experienced property management company in London. It also includes some of the leaseholder research conducted for the London Assembly’s report ‘Highly Charged’ – an investigation into leaseholder service charges in the capital.
What Can I Do About Bad Management?
Now we know what makes for bad block management what can we do about it?
There’s something called the Leasehold Valuation Tribunal (the LVT is a statutory tribunal, a kind of court) which can help, but it generally only tackles disputes between the leaseholder and their landlord – not the managing agent. There’s no established recourse in law to tackle bad managing agents. And, in spite of a call by many in the sector, managing agents have no regulatory body.
The managing agents’ trade bodies like ARMA and IRPM offer some support but they don’t have the teeth of a regulating authority. To further compound the problem unlike most service users leaseholders cannot simply vote with their feet and switch suppliers.
Change Your Managing Agent: The Plan
First things first – do you have the right to ‘hire and fire’ your managing agent? If your block has a Management Company (see sample lease below) – good news – the Directors (block residents who have volunteered to become Directors) have the authority to change your new managing agent. If you’re not a Director but want to become one, you can. Read on…
First let’s assume there is a management company called Rose Court Management Company Limited. When you bought your flat you would have been made a shareholding member of this Limited Company. As a shareholder of Rose Court Management Company Limited you are important! Shareholders, (aka members), are ‘senior’ to Directors. (But being a Director of a Limited Company is a very responsible position. More of that later).
The Hierarchical Structure Of A Resident Management Company
The Directors are often active residents within the block who wish to get involved in the management. The Directors are appointed by, and answer to, the shareholders. The Directors instruct the managing agent.
As an example: if you, as a shareholder of Rose Court Management Company Limited, were for whatever reason unhappy with a Director, say Robert from Flat 4, you could call a meeting and ask for a vote seeking Robert’s removal. The process is democratic though. If the majority of shareholders voted in favour of Robert – Robert stays on as a Director. The point is, it’s the shareholders’ call.
How Do I Become A Director?
As mentioned where there is a Management Company in place you can seek the support of the shareholding members (your fellow residents) to become a Director. First, you should try asking the existing Directors for their support to appoint you to the Management Company Board. Remember Directors are kind of role models for the block so if you are in breach of your lease with, say, arrears you’ll have to fix that first.
Sometimes no one has put themselves forward to be a Director and the managing agents have assumed the role. In which case you can write to your managing agents and instruct them to convene an Annual or Extraordinary General Meeting (AGM or EGM) with the business being your appointment as a Director. The managing agents will then write to everyone in the block informing them of the AGM/EGM and your proposal to be voted in as a Director. Your neighbours can then attend the meeting to vote or vote by proxy.
If you prefer you can of course ask a couple of other leaseholder neighbours to become Directors too. It can help to spread the responsibilities.
Lobbying your neighbours and sharing your plans for the block in the run up to the meeting is an effective way to win support for your appointment. You’ll find leaseholders are only too happy for someone to take charge of issues at the block.
Once the meeting’s been agreed lobby your neighbours for support. Leaseholders can vote in person or by proxy.
Bear in mind the Director role is a very responsible position and is governed by, amongst other legislation, the Companies Act 2006. You’ll be legally responsible for the financial side of things as well as health and safety and so on. Make sure you are insured too.
Does My Block Have An Established Management Company?
Leases with a management company are often called tri-party because there are three parties to the lease: the freeholder, the Management Company, and the leaseholder(s). Like this:
Pycroft Limited is the freeholder. Principal Lofts Management Company Limited is the Management Company. And Jon and Sarah are the leaseholders.
To find out if your block has an established Management Company just check your lease. If you haven’t got a lease get one from the solicitor who carried out your property purchase. Or get one from the Land Registry.
Usually all the leaseholders are members of the Management Company.
As a Director of the Management Company you have the authority to change managing agents. Obviously you’ll need to work with the other Directors and company Members to effect the change. Make sure you’re prepared. Timing can be important i.e. making the change at the end of the service charge year is sensible. And what notice is in the current management agreement? What else do you need to do to make sure the transition is seamless?
What If My Block Does Not Have A Management Company?
You still have options.
Under the Commonhold and Leasehold Reform Act 2002 you and your neighbours can get together and apply for the Right To Manage. There are some legal criteria you need to meet. Find out more on our Right To Manage page.
Alternatively you can club together with your neighbours and buy the freehold to your property. Owning the freehold gives you and your neighbours the ultimate authority.
Or under Section 24 of the Landlord and Tenant Act 1987 where the management of a property by the landlord is considered unsatisfactory and the tenants are unable to exercise the Right To Manage and there is no other remedy available to the tenants, likely to improve things, you can apply to the LVT for the appointment of a manager.
Provided the LVT is satisfied that the case warrants such action, it may make an order to replace your Property Management company with a manager named by the LVT.
The new 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.
Remember if you feel you’re block is suffering with a poor managing agent you CAN do something about it.