Question 1

Issues with managing agents

Accepted Answer

Issues with managing agents Q: We are a new Association recognised by our Freeholder in December 2017. We are having several issues with our Managing Agents. 1: They are either failing to reply to our emails or taking several months to respond. 2: We have raised several issues with regard to the proportioning of several service charge items, between the residential leaseholders (66 flats) and three commercial units all owned by one investor. It appears that there has been a historical overcharging of the residential leaseholders. We have detailed our concerns to the Managing Agent but despite sending several emails chase up over the past three months we have failed to receive a response of any kind from the Managing Agent. 3: We are also concerned over ongoing water ingress in a basement plant room and lift shaft. We were informed in July by a surveyor, if left, this issue could have long term implications to the structural integrity of the basement walls. In November we were advised that a damp proof expert had carried out an inspection and was preparing a report. We have asked to see this report and to be advised of what remedy is being proposed. Despite emailing several times we have not had any response. We have written to the Freeholder but they have stated that they have no control over the Managing Agents and have not made any response at all to our concerns over the basement water ingress. Any advice you can provide would be gratefully received. I have attached a sample residential lease. FPRA Hon Consultant Neil Jinks replies: I will try and deal with the various issues, which you have raised as concerns, one by one: 1.Firstly, whilst the Resident’s Association may be a recognised entity, if it is to bring any action in its own right then it has to be properly constituted and have Court approval. This may be in place already, but I have no confirmation of this. 2.The Freeholder is quite correct. It does not control the Management Company. The Company is appointed under the Terms of the Lease to which it is a party. 3.There are various methods by which the Residents can challenge the actions of the Management Company and these are as follows: (i)The Leaseholders can, either as a properly constituted Resident’s Association or as a collective body, bring an Application before the First-tier Tribunal. This is fairly straightforward and would be an application for a determination of reasonableness of charges and a declaration that the management company is in breach of lease. If there are discrepancies in the sums charges to the leaseholders, possibly over a period of years, these can be challenged and the Management company would have to provide detailed evidence of the charges and the fact that they are proper charges, being apportioned in accordance with the Lease. You would also state that they are in breach of their covenants under the Lease in respect of the failure to repair the basement and stop the water ingress which falls under their covenants at Schedule 6. Once a determination is made, this is binding on the Manager and is a fairly simple and cost-effective process, although can be time-consuming if opposed. (ii)The Leaseholders could apply for the appointment of a Manager. This is, again, an application to the First-tier Tribunal. It requires the support of the leaseholders and is a fault-based application. You have to be able to show and prove that there have been failures by the current management. The first stage is the service of a Notice, setting out the failures and allowing a reasonable period of time to remedy those failures. If the management fails to remedy the various matters you can ask the Tribunal to appoint a different manager. This should be an experienced Managing Agent, preferably known to the Tribunal and in whom the Tribunal has faith. It is always possible for the Manager to oppose the application and set out its reasons why there are no failures or why it needs extra time to comply so it is not straightforward and can be an expensive process. (iii)You could, if more than 50% of the leaseholders agree, form a Right to Manage Company. This would then issue a Claim Notice, claiming the Right to Manage. The Manager would certainly issue a Counter Notice if there was any reason to defeat the Right to Manage and you would then need to apply to the Tribunal so that they could grant Right to Manage status. This is a fairly complex process and you would need assistance to set up the Right to Manage and deal with the Claim Notice and any application. Also, a Right to Manage can only apply to one building and, if the development consists of several buildings it would require separate Right to Manage Companies for each building. I have not seen a plan so can only give a general advice as to this.

Question 2

Issues with managing agents

Accepted Answer

Issues with managing agents Q: We are a new Association recognised by our Freeholder in December 2017. We are having several issues with our Managing Agents. 1: They are either failing to reply to our emails or taking several months to respond. 2: We have raised several issues with regard to the proportioning of several service charge items, between the residential leaseholders (66 flats) and three commercial units all owned by one investor. It appears that there has been a historical overcharging of the residential leaseholders. We have detailed our concerns to the Managing Agent but despite sending several emails chase up over the past three months we have failed to receive a response of any kind from the Managing Agent. 3: We are also concerned over ongoing water ingress in a basement plant room and lift shaft. We were informed in July by a surveyor, if left, this issue could have long term implications to the structural integrity of the basement walls. In November we were advised that a damp proof expert had carried out an inspection and was preparing a report. We have asked to see this report and to be advised of what remedy is being proposed. Despite emailing several times we have not had any response. We have written to the Freeholder but they have stated that they have no control over the Managing Agents and have not made any response at all to our concerns over the basement water ingress. Any advice you can provide would be gratefully received. I have attached a sample residential lease. FPRA Hon Consultant Neil Jinks replies: I will try and deal with the various issues, which you have raised as concerns, one by one: 1.Firstly, whilst the Resident’s Association may be a recognised entity, if it is to bring any action in its own right then it has to be properly constituted and have Court approval. This may be in place already, but I have no confirmation of this. 2.The Freeholder is quite correct. It does not control the Management Company. The Company is appointed under the Terms of the Lease to which it is a party. 3.There are various methods by which the Residents can challenge the actions of the Management Company and these are as follows: (i)The Leaseholders can, either as a properly constituted Resident’s Association or as a collective body, bring an Application before the First-tier Tribunal. This is fairly straightforward and would be an application for a determination of reasonableness of charges and a declaration that the management company is in breach of lease. If there are discrepancies in the sums charges to the leaseholders, possibly over a period of years, these can be challenged and the Management company would have to provide detailed evidence of the charges and the fact that they are proper charges, being apportioned in accordance with the Lease. You would also state that they are in breach of their covenants under the Lease in respect of the failure to repair the basement and stop the water ingress which falls under their covenants at Schedule 6. Once a determination is made, this is binding on the Manager and is a fairly simple and cost-effective process, although can be time-consuming if opposed. (ii)The Leaseholders could apply for the appointment of a Manager. This is, again, an application to the First-tier Tribunal. It requires the support of the leaseholders and is a fault-based application. You have to be able to show and prove that there have been failures by the current management. The first stage is the service of a Notice, setting out the failures and allowing a reasonable period of time to remedy those failures. If the management fails to remedy the various matters you can ask the Tribunal to appoint a different manager. This should be an experienced Managing Agent, preferably known to the Tribunal and in whom the Tribunal has faith. It is always possible for the Manager to oppose the application and set out its reasons why there are no failures or why it needs extra time to comply so it is not straightforward and can be an expensive process. (iii)You could, if more than 50% of the leaseholders agree, form a Right to Manage Company. This would then issue a Claim Notice, claiming the Right to Manage. The Manager would certainly issue a Counter Notice if there was any reason to defeat the Right to Manage and you would then need to apply to the Tribunal so that they could grant Right to Manage status. This is a fairly complex process and you would need assistance to set up the Right to Manage and deal with the Claim Notice and any application. Also, a Right to Manage can only apply to one building and, if the development consists of several buildings it would require separate Right to Manage Companies for each building. I have not seen a plan so can only give a general advice as to this.

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