Right to manage as a leaseholder - disadvantages?

[Sparkysea]

Hi all

I have been trying to learn about "Right to Manage" as I am interested in buying a flat which allows leaseholders to arrange who can manage their building.

Please can anyone advise me of the disadvantages of buying a flat where there is the RTM?

What if the Director wishes to leave or other occupants don't pay their service charge? What idf people try and sell and they haven't paid it? Couldn't sorting that out be a nightmare?

Currently the service charge on these flats is much higher than I would expect and it doesn't look as though the RTM company are tending the gardens well.

The vendor has said "oh, you and the neighbours can change the RTM/service company and bring down the charges" but I wonder why this hasn't been done already??

Your thoughts would be greatly appreciated

Sparky

[jules_s]

Hi,

Take this response with a touch of salt because it's late and I'm not sure it's necessarily pertinent to your position.

First off, 'we' did this MAL quite a few years back circa '94. The developer had a freehold lease management obligation (might/was compulsory) for the first few years of the lease terms. Whilst flats were sold etc.

As it happened they (Heron homes) went bust in the interim, and as I recall we were almost 'forced' to form a management company.

At the time i wasn't involved, but a new company had to be formed at Company house which involved new directors/management co in place. I got involved when both directors/owners sold up and left the rest of us to it.

The then management company then asked me (as long leaseholder) to be a director to which I accepted.

After that, I pretty much took a back seat until the management company decided it was a good idea to farm off all of the services required to their sister companies/mates.

First off, the freeholder quite legitimately insisted we insured the building with their sister company at twice what I could get it insured for...not pleasant.

Next we had numerous tenants bail out owing management fees...chasing the landlords wasn't pleasant either.

Numerous management meetings about sinking funds from the flat owners about common parts decorating/landscaping where a nightmare.

Best of luck to you, I'd only think about if it was all long lease owners not rental

[Sparkysea]

Mmmm..thanks Jules thanks for your prompt and helpful reply. As I thought could be a nightmare. Most of the flats I think are owned by young occupants who are likely to be first time buyers.I think they would want to move on in a few years.

[mk1fan]

It's a lot of work and can be a ball ache. In reality the vast majority of people buy falts without ever reading the lease or understanding their obligations.

There are advantages. It should be cheaper and you should have more control over keeping the place in good order. Personally, I prefer to build up a sinking fund year on year so that when something major is required it avoids large claims being made.

It should also allow things to get done quicker.

[Sparkysea]

Hi Many thanks for this,
I am concerned that this property doesn't appear to have any sinking fund...it is 14 years old and the flat I intended to buy was from a director of the RTM company and can't see on the accounts who is now the director...

Also the service charge is much higher than other blocks of flats in that road which makes me concerned.

Does anyone else have any experience of RTM?

Many thanks

Sparky

[craigjm]

Right to manage or buying the freehold?

Buying the freehold is better as it also means you don't have to worry about lease extensions etc but then all of the issues with right to manage occur too. Both can be great but the disadvantages include -

Extra work if you have to act as a director
Work not getting done because everyone wants to pay the minimum
Its not as democratic as you might like as the committee can make decisions you may not like
If people don't pay their service charges there are costs and hassle of taking them to court (this can be prevalent where there is a high level of flats rented)

I lived in a right to manage flat once and nothing got done, we only paid basic service charges as thats what people wanted but you have to change the bulbs in the internal stairwell out of your own pocket and the like. Hated it. When resident disputes arose there wasn't anyone to go to about them as those in charge were mates of those causing trouble etc.

[tomellingham]

If you live in a block of flats as leaseholders, but do not have RTM, are there any particulars for voting to get something done? For instance, we all want a security gate built as currently we only have a barrier which people can walk past and in to our car park. How can we push for something like this to be built, we are willing to pay for it?

[craigjm]

tomellingham said:

If you live in a block of flats as leaseholders, but do not have RTM, are there any particulars for voting to get something done? For instance, we all want a security gate built as currently we only have a barrier which people can walk past and in to our car park. How can we push for something like this to be built, we are willing to pay for it?

I suggest you all write to the leaseholder suggesting this and if they dont respond positively to it then put it on the agenda for the annual AGM and insist that as many people attend as possible.

[Wings]

Firstly, very much depends on the number of leaseholders, age of the building, whether block purpose built as flats, and lastly the differing age and values of the leaseholders.

I happen to be a leaseholder/director of a block of five flats, and due to various poor and corrupt past management companies, gave serious consideration to self management. I decided against self management, mainly due to the lack of input, involvement and the differing ages and values of the other leaseholders. I also considered that I was not prepared to take the thankless, unpaid responsibility, and that a third independent party was a required legal buffer zone between disgruntle leaseholders.

If leaseholders can work together and self manage, then there are considerable savings in administration costs, the same that can be possibly used on the fabric of the building/block.

[tomellingham]

craigjm said:

tomellingham said:

If you live in a block of flats as leaseholders, but do not have RTM, are there any particulars for voting to get something done? For instance, we all want a security gate built as currently we only have a barrier which people can walk past and in to our car park. How can we push for something like this to be built, we are willing to pay for it?

I suggest you all write to the leaseholder suggesting this and if they dont respond positively to it then put it on the agenda for the annual AGM and insist that as many people attend as possible.

I can imagine it will be quite a hassle at my end! Flats are a year old, not purpose built (it's an old office building). The building itself is split in to two, one half being council housing with some shared ownership flats also. The other half is bog standard leasehold flats. So presumably I would need 50% of all the flats to be able to tell the management company to proceed with the construction?