Unsatisfactory block management – the need for an application
At the moment, if you own a leasehold flat and are unhappy with the management of the building, you can apply to the First-tier Tribunal (Property Chamber) to appoint a new block manager. But, because the right to appoint a manager is a fault-based right, leaseholders will need to meet certain strict statutory criteria.
NB, appointing a manager in this way is normally referred to as a “court-appointed manager” – though technically the application is to and the appointment made by the First Tier Tribunal.
How our specialist leasehold team can help you
Our dedicated leasehold team can explain the complexities around leaseholds and arranging for a court-appointed manager in practical terms, ensuring you fully understand your rights. We will also support you through the application process, keeping you informed the entire time.
Here at Bonallack & Bishop, we have a dedicated team of expert lawyers specialising in leasehold property matters. Our team assist leasehold flat owners in matters such as obtaining the Right to Manage, lease extensions and collective freehold purchases, along with the Appointment of Managers by Tribunal. The team are always happy to discuss any issue you may have and would be pleased to hear from you.
We understand that in most cases, leaseholders who wish to appoint a manager have experienced immense frustration and feel ignored. When working with our specialist team, you can be confident your needs and objectives will be front and centre of our focus, and, with a highly respected law firm on your side, you have the best possible chance of achieving these.
Our specialist expertise – don’t just take our word for it
Our multi-service law firm provides advice to clients locally across Wiltshire, Hampshire, and Dorset and throughout England and Wales – from our offices in Salisbury, Fordingbridge, Andover and Amesbury.
For a FREE initial phone consultation with one of our leasehold specialists, and an instant no obligation quotation, please call 0800 1404544 or (01722) 422300.
What is the court appointment of a manager?
Section 24 of the Landlord and Tenant Act 1987 provides the right to leasehold tenants to apply to the First Tier Tribunal [or FTT] to have a property manager appointed. This is different from applying for the “Right to Manage” or RTM (see below).
The Tribunal will, if the flat owners are successful in their claim appoint a replacement manager nominated by the flat owners or, in some cases, the flat owners can create their own company and the Tribunal may agree to appoint that company.
In this way flat owners can replace bad managers.
A court-appointed manager will take responsibility for the management of the building over and above the landlord or landlord’s appointed manager.
Can leaseholders give instructions to a court-appointed manager?
In short, no.
It’s really important to understand that a Court appointed manager is actually an employee of the Court, not the freeholder or leaseholders.
As a result,the appointed manager is answerable to the Tribunal and not the freeholder or the flat owners themselves.
The Tribunal will give the new manager Directions and they will have to follow the codes of best practice and act in the interests of the leaseholders, but the actual Order the Tribunal make will be what dictates what the Managers can and can’t do. It will not be possible to change any of the provisions contained within the existing leases.
The Law Commission consultation
For many years now, the law surrounding leasehold management has been in desperate need of reform. Much to the delight of many, in July 2020, the Law Commission published the results of their consultation on this issue, containing a large number of proposals aimed at streamlining the law and providing greater rights to leaseholders over their property.
It remains unclear which of the many proposals made by the Law Commission will actually be taken up by the government. But it seems unlikely that any of the recommendations will be translated into law before 2022/3 at the earliest.
Why would we want to appoint a manager for our building?
Typically, a Leaseholder will ask the Tribunal to appoint a manager if a property is managed poorly.
And before you think that this type of problem mainly occurs in low-income houses, consider that the service charges for luxury flats lining the Thames can amount to around £7,000 per annum . The average surcharge is between £1,000 and £2,000 per year.
If you are paying this kind of money, it is natural to expect timely and competent services and maintenance; but this is often not the case. And even worse, leaseholders are sometimes charged extortionate sums for service charges.
In 2017, the Guardian reported that leaseholders owning flats above a Brixton shop were being charged “almost £3,000 a year, the paperwork suggests, to “vacuum the corridor” 52 times a year, plus more than £990 a year “to test the corridor’s lights”. The landlord company subsequently reduced the charges to a more reasonable rate.
In this case, the tenants applied for a Leaseholders’ Right to Manage as the retail premises below the flats took up more than 25% of the building; which is often the case if the commercial part of the property has a basement.
Under Right to Manage rules, to qualify, the building has to be at least 75% residential property. Therefore, in such circumstances, applying for a court-appointed property manager is the only option to take control if you feel the property managed poorly.
Does our building qualify?
For a building to qualify for a Court appointed property manager it must comprise in whole or in part a residential building which contains a minimum of two flats.
The right does not apply to houses.
Are some buildings exempt from the appointment of a property manager?
You cannot apply for a Court appointed property manager if :
· Your landlord is The Crown
· Your landlord is the local authority or another public sector body – which includes registered social landlords and other housing association, or a charitable housing trust (in some cases)
· Where less than half the flats in the building are subject to long leases, and the landlord is resident, and it is their principal residence and has been for a year or more, and the property is converted rather than being purpose built for flats.
Our leasehold team will quickly assess your situation and let you know if your building qualifies.
Do all the leaseholders need to agree to apply for a court-appointed property manager?
Unlike making an application for a Right to Manage, a single tenant can apply to the FTT to have a property manager appointed – although an application can also be made by a group of leaseholders together.
However, they need to provide strong proof that there are sufficient grounds for changing the block management in this way.
What are the grounds to appoint a manager?
The grounds for appointing a property manager don’t allow just any disgruntled leaseholders from ousting their landlord or the landlord’s agent’s management authority as retaliation for petty disagreements.
You will need to prove one of the following to convince the Tribunal they need to appoint a property manager on your behalf:
· The landlord has breached their obligations in relation to the management of the building, under the tenancy agreement.
· Unreasonable service charges are being asked for or are likely to be demanded.
· The landlord is not complying with approved codes of management practice, for example, the Royal Institution of Chartered Surveyors’ Residential Management Code.
· The landlord or agent has made or is proposing to make unreasonable, variable administration charges.
· Other reasons make it just and reasonable for the Court to appoint a property manager.
In all cases, the applicants must show it is “just and convenient” for a property manager to be appointed.
You will need to collect evidence in support of your application.
Our property law team will advise you on the best strategy for successfully arguing that a property manager should be appointed. In addition, we will gather the necessary supporting documents and represent you in proceedings at the First-tier Tribunal (Property Chamber) – which was previously known as the Leasehold Valuation Tribunal [‘LVT’]. We have plenty of experience of property Tribunal cases; so you can trust your application is in expert hands.
Who can be a court-appointed property manager?
As part of the application process, the applicant leaseholders will be asked to nominate a named property manager. However any appointment is completely within the discretion of the Tribunal.
It’s worth noting that any manager appointed in this way, need not be an existing, professional managing agent. It could, for example, even be one of the leaseholders themselves, or a management company set up for this purpose by the leaseholders. Professional qualifications are not aalways essential.
However, one of the main reasons for the rejection of a proposed property manager by the Tribunal is lack of experience. One way to pre-empt is to engage the services of an experienced property management company. We work regularly with a variety of block managers and we are happy to introduce you to one of them local to you.
You will also find useful information about finding a property manager here
What are the alternatives?
If any reason you don’t think that a court appointed manager is the right way to solve your particular problem, the two alternatives are
- taking over the right to manage or
- joining together with sufficient other leaseholders to jointly buy the freehold of your block – a process known as collective enfranchisement. We specialise in enfranchisement cases.
Click here to read more about the pros and cons of right to manage
Click here to find out more about how lease enfranchisement could work for you.
Acquisition Orders are another alternative. They are an obscure and rarely used order made under the Landlord and Tenant Act 1987 which allows qualifying leaseholders to force their freeholder to sell them the block. It is only possible where the freeholder has been in breach of their repairs, maintenance, insurance, or management obligations
What’s the difference between Right to Manage and a Court appointed property manager?
Under the Commonhold and Leasehold Reform Act 2002, leaseholders have the right to apply to set up a company and take over the right to manage their building. Unlike making an application for a court-appointed property manager, tenants do not have to prove any mismanagement on behalf of the landlord or management company.
However, there are strict criteria related to Right to Manage applications which may make it unsuitable. These include:
· At least two-thirds of the tenants must be ‘qualifying tenants,’ i.e. the tenant’s original lease was granted for more than 21 years.
· As mentioned above, at least 75% of the building must be residential housing and no more than 25% commercial.
· The landlord of any qualifying tenant cannot be a local housing authority.
· The landlord qualifies for a Residential Landlord Exemption.
· At least 50% of the qualifying tenants must agree to the Right to Manage application.
To provide you with peace of mind, our team can swiftly assess your situation and let you know the best option available in terms of the rights gained, the costs, and the complexity of the arrangement (Right to Manage comes with significant responsibilities).
It’s also worth noting that in appointing a new Manager in this way, any existing Right To Manage is effectively terminated.
Click here to read more about the right to manage and how our experienced team can help you.
3 things to consider before you start the process
· Consider your reasons for making the application – Do you think that the current managers are to blame for the problems you are experiencing? Could it be your freeholder? Or perhaps your residents management company? Or even the terms contained in the lease which are unreasonable?
· Do the problems amount to a breach of their management obligations? See “What You Need to Prove” below
· Have you tried making a complaint and resolving things with them directly? If they are ARMA ( the Association of Residential Managing Agents) registered they should have a complaints procedure and the option to apply to an Ombudsman if you aren’t happy with the outcome
How do I apply to the Tribunal for an appointed property manager?
The first step to applying for a Court appointed property manager is to serve notice on the landlord or the management company. This notice (issued under section 22 of the Landlord and Tenant Act 1987) needs to set out the reasons why you are concerned with the current management or service charges.
As part of the claim the leaseholders need to identify a new manager or incorporate a company they can nominate for the purpose. The new manager will need to provide a brief statement of their credentials and confirmation that they understand both what they are being asked to do and the process involved. If the leaseholders are nominating their own company they will need to show that they are able to manage the block in line with the Tribunal’s Order and that they are committed to doing so.
Our team will draft a comprehensive, robust notice on your behalf and ensure the contents is valid. An invalid Section 22 Notice is likely to be rejected by the Court.
If the matters of concern set out in the letter are not addressed, it is necessary to make an application to the First-tier Tribunal (Property Chamber). To do so, must prove you meet one of the grounds set out above and that it is just and convenient to appoint a property manager.
Click here to read more about how the First-tier Tribunal (Property Chamber) works.
Preparing your Claim
If you have instructed a solicitor they will prepare your claim for you.
This will involve;
· An application form to Tribunal
· A pre-trial review may take place
· A hearing date will be set
· You will need to make a statement of case, with supporting evidence
· If the application is resisted then your manager/landlord will need to provide their statement of case in reply
· You will then nominate your chosen manager and they will need to give their brief
· Your solicitor may then prepare a draft Management Order
· A bundle of documents will need to be prepared for the Tribunal by you or your solicitor
What powers does a court-appointed manager have?
The Tribunal has wide discretion regarding the scope of the property manager’s powers. Generally, they will receive the authority the FTT thinks is needed to ensure competent management of the building.
Please be aware that any Managerput in place in this way, is responsible only to the Tribunal. In particular the manager does not need to get approval from, or accept instructions, from either the leaseholders in the block or the Landlord.
The Tribunal Order Itself
The tribunal has a wide scope about detail to be included in the orders. Among the most common conditions contained in these orders are the following ;
- for any appointment to be time limited – or permanent;
- for the manager’s costs and fees incurred by the application to be paid by the landlord, the tenants or by any relevant person
Can an Order be amended or discharged?
In short, yes. A further application can be made to the FTT either by the Landlord or one or more of the leaseholders (and that includes leaseholders who weren’t part of the original application) in order to discharge or vary an Order.
The discharge of any order means that block management is returned to the landlord.
Thinking of Proceeding Further?
To talk to our specialist leasehold team about having a property manager appointed by the Tribunal or any other legal matter relating to your leasehold flat , please call us for FREE, no strings attached, expert legal advice.