This is a guide for leaseholders who are considering exercising the right to manage their building. Leasehold Property Rights expert, Leanne Donoghue, explains the qualifying criteria, the right to manage procedure, common problems, costs and more.
Leanne is available on 01225 462871. Alternatively, you can email her, or complete the Contact Form at the foot of this page.
As a leaseholder, if you are:
- frustrated by high management charges; or
- otherwise dissatisfied with the management of your building and common areas,
The right to manage leasehold flats was introduced not only as a solution to poor landlords and managing agents but also as a way to empower leaseholders. After all, remember that between you, the leaseholders hold most of the value in your building.
Leaseholders right to manage
Exercising the leaseholders’ right to manage is relatively straightforward. You do not need your landlord’s consent and an application to the court is not required. However, a majority of the leaseholders must be in favour. The other main right to manage qualifying criteria are:
- At least two-thirds of the flats must be let to “qualifying tenants”, ie leaseholders whose lease was originally granted for a term of more than 21 years.
- While part of the building can be commercial, the non-residential part cannot exceed 25% of the building’s total floor area, excluding common parts.
- If any qualifying tenant is the tenant of a local housing authority, right to manage does not apply.
- Right to manage does not apply if the premises fall within the Resident Landlord Exemption. To satisfy this exemption:
- the premises must not be a purpose-built block (so, for example, it might be a converted house); and
- must not comprise not more than four flats; and
- at least one of the flats must have been occupied by the landlord (or an adult member of their family) as their only or principal home for not less than the last twelve months.
Right to manage company
You will need to exercise your right to manage through a right to manage company to be formed by the leaseholders. Once the right to manage has been acquired by the leaseholders, the landlord is entitled to membership of the right to manage company.
Right to manage company directors
Volunteers must be found to serve as officers of the right to manage company. Remember, they will not only have the usual responsibilities of company directors, but also those of residential property landlords.
Right to manage procedure
The right to manage procedure is exercised by serving a formal notice on the landlord. After a set period of time, management responsibility transfers to the right to manage company, which will have already been set up by the leaseholders. It’s important to understand that there is a significant amount of work to be done before serving the notice. For this reason, it’s advisable to instruct us at an early stage, ideally as soon as you know that you have sufficient qualifying tenants on board. We can then advise you on whether you satisfy the qualifying criteria and, subject to that, guide you through the right to manage procedure.
You should also note that the right to manage applies to an individual building, so on a development of several blocks, each would need to qualify separately. If a co-ordinated approach results in all blocks qualifying, there are usually economies of scale and management advantages in taking over management of the whole development.
Right to manage problems
Since its introduction, right to manage has been a great success. But there are some problems which do still occur. Right to manage solicitors are well placed to help you avoid these. Common right to manage problems we can help you avoid are:
- ensuring you are aware of, and adhere to, the rights and obligation you will acquire;
- avoiding poor management which may after all be the reason you are exercising the right to manage in the first place;
- being aware of all of the ongoing costs associated with the management of the block;
- ensuring you have sufficient initial funds to meet obligations such as maintenance, repair and insurance costs which may fall due before service charges are recovered.
Right to manage costs
The most important consideration when appointing right to manage solicitors is to ensure they have suitable expertise and experience. If they don’t, they could end up wasting you considerable time and money, and even risk the directors of the new right to manage company incurring personal liability.
A ‘badge of assurance’ to look out for is membership of the Association of Leasehold Enfranchisement Practitioners (ALEP), membership of which requires a firm to demonstrate both expertise and experience, and to adhere to an agreed level of conduct and service.
There are a host of factors that will affect the overall right to manage legal costs per flat. These include:
- the type and situation of the building;
- the mix of the building (eg it’s more complex if there’s mixed commercial/residential use or there are some social tenancies in the block);
- the number of participating leaseholders.
We recommend that you contact us initially for a free and informal discussion. Beyond that, many leaseholders instruct us first to advise them on whether the qualifying criteria are satisfied. If they are, and you’re happy, we can then proceed further. Both stages are available on an agreed fixed fee basis.