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Enhancing Conditions and Reducing Costs: More Leaseholders Take More Control Under RTM!.

June 28, 2019
Enhancing Conditions and Reducing Costs: More Leaseholders Take More Control Under RTM!

The world of block management has shifted over the last five years, at least. Where once, three in four of the apartments were owned by often absent landlord investors, today around three in five are lease-holder, owner-occupiers. The changing demographic is making a crucial difference to how a block now needs to be managed, which will satisfactorily meet and maintain, fair and reasonable building conditions and service costs.

Ever since the Right to Manage (RTM) was introduced under the Commonhold and Leasehold Reform Act in 2002, leasehold ownership of an apartment has increasingly become a popular choice. Of the estimated 4.3 million leasehold dwellings in the UK by 2016-17, more than two thirds (2.9 million) were apartments, according to latest available data (Ministry of Housing, Communities and Local Government (MHCLG), October 2018).


Leaseholder expectations have grown

At the same time, more leaseholders want to get their hands on a copy of their lease to better understand what the jargon actually means, and take a magnifying glass to the small print. Increasingly, owner-occupiers are concerned over the maintenance of the common parts and show more interest in the running of the block itself. It’s not just the number of leaseholders which has grown, so too, have their expectations, which are forcing landlords to up their game or face being replaced by a new block manager.

In October 2018, The Housing, Communities and Local Government Committee started to look at the present leasehold system, including the issue of ground rents, and in March 2109, reported that it would be legally possible for the Government to introduce legislation for reform.

There can be no doubt that long-running issues surrounding the property management of a block are under intense scrutiny. As a consequence, the management process is expected to be raised to a much higher quality level of leaseholder relationship and service operation.


Increasingly emboldened to take more control

Today, occupants of leasehold apartments will no longer put up with not being listened to or fobbed off with unsatisfactory responses, yet all the while, service charges are being ramped up. Many leaseholders are increasingly emboldened to take more control over the management of their block with the clear aim of improving services and addressing rising costs.

The benefits of appointing new block management can be felt almost immediately. Initial savings are likely to be seen simply because the previous managing agent has been replaced and excessive service charges reduced. Under the Right to Manage process, leaseholders who appoint their own managing agent directly are also more likely to have more regular, direct contact and develop a constructive relationship.

With a chosen managing agent acting on their behalf, leaseholders are also better placed to actively obtain best ‘value for money’ maintenance services. The managing agent should be able to provide good ‘local’ contractors at a local competitive rate rather than use larger and invariably, more costly nationwide suppliers.


Ensuring the block is maintained and serviced in line with the lease

Under RTM, those leaseholders who are directors of their RTM company also have legal obligations. They are directly responsible for ensuring that they and their appointed block managers carry out the block owner / landlord’s obligations contained in the building lease, as if they were the landlord themselves. This includes maintaining and servicing the building to prevent deterioration, in line with the lease, and current Health and Safety regulations.


Maximising their asset in the longer term

Ultimately, Right To Manage gives leaseholders the power and the authority to determine the direction they wish the development of their building to take while exercising control of expenditure. There will always be challenges to overcome – sometimes starting with the RTM acquisition from the present landlord.

However, there is no doubt that when owner-leaseholders are responsible for decision-making, the focus is definitely on the careful care and attention to the structure, and the running of the building at all times. This means not only daily living conditions for occupants are enhanced but also leaseholders are maximising their asset to achieve greater resale and /or rental values in the longer term.