The management of long leasehold property is a complex business requiring a full understanding of the structure and the meaning of leases, a thorough knowledge of the statutory requirements of various landlord and tenant legislation (there are at least six key Acts of Parliament along with scores of Regulations) and compliance with the recognised Codes of Practice.
All ARMA members endorse, accept and undertake to comply with the RICS code of practice “Service Charge Residential Management Code” approved by the Secretaries of State for England and Wales under the terms of Section 87 of the Leasehold Reform, Housing and Urban Development Act 1993.
In effect managing a block of flats is like managing a business which requires specific skills and time.
Some lessees who own their freehold, who have exercised their Right to Manage or have been given the responsibility to manage by the freeholder do self-manage their properties perfectly satisfactorily, so why use a managing agent? Because, if you select the right managing agent they will:
- Have a full understanding of leases and relevant legislation
- Comply with the Codes of Practice
- Have an in-house team (and outside contractors) to deal with all aspects of managing the property.
- Be able to provide full accounting facilities for budgeting, service charge collection and year end accounting.
- Deal with arrears collection.
Most importantly, free up the lessees to enjoy their homes and reduce the personal time that lessees would otherwise have to give in managing the property themselves.
Right to Manage.
Under the Commonhold and Leasehold Reform Act 2002 the Right to Manage came into force at the end of September 2003 and Commonhold was introduced in September 2004.
Right to Manage gives qualifying lessees the right to take over the management of their building without having to prove that the freeholder is at fault. It is not a step lessees should take lightly as responsibilities come with the powers, including an ongoing responsibility to the freeholder.
There are prescribed qualifying rules and procedures that have to be strictly followed. In addition, qualifying lessees through their RTM company (a special company that is limited by guarantee) will need to thoroughly research the current status of the property, for example, arrears, ongoing building works etc, and its future needs for example, day to day management, cash flow, major cyclical maintenance etc.