Simple guide to 'Right to Manage' for landlords
Property law is changing all of the time. As a landlord, there’s lots to keep on top of. Some issues, like needing an annual gas inspection and certificate, are well publicised. Other changes, such as rights of landlords and tenants in leasehold properties, pass under the radar. However, if you own rental properties in a block or on a development, it’s something you should have at least a basic understanding of.
Freeholder Confusion
Don’t get confused between the two interpretations of “landlord” when it comes to talking about leasehold properties. Here, we’re talking about people who buy properties and rent them to other people to live in. Sometimes you’ll also see freeholders – the people who own the ground on which blocks of flats are built – also referred to as landlords. This isn’t the group of people we’re discussing here.
What Is Right to Manage?
In many blocks of flats and other residential developments, there is an annual service charge paid to the freeholder or management company. This covers things like repairs, maintenance of common areas and gardening. If you are renting your property, usually this fee is paid by the tenant. Right to manage gives groups of owners the right to ditch the current management company which is maintaining their block of flats or development, and set up their own. In order to do this, there has to be agreement from over half of the owners of the properties concerned.
What’s in it for me?
The main advantage of going for right to manage is a reduction in costs. Property owners who manage their own buildings aren’t out to make a profit; they’re just trying to get the best services, at the best value for money. If there are enough fellow owners prepared to step up and form a company, then everyone could see a reduction in their service charges. You are free to get as involved as much or as little as you like with the day to day running of the management company. Remember also that if you own more than one property on the same development, you get two votes on any matters concerning the block. Alternatively, you might be happy to put the job in someone else’s hands and leave the day to day running to others, usually owner occupiers in the same block or road.
What about my tenants?
Only property owners can get involved in a bid to get the right to manage, and then take a position in the newly-established management company. Tenants aren’t legally allowed to take on these roles, even when they’re willing to do so. Tenants generally aren’t terribly interested in the legal set-up of the building’s management company. They just want to know that someone is looking after the communal areas. However, it’s probably fair to pass on any reduction in the service charge to your tenants, and ask them to forward any mail regarding the property to you if it arrives at the rented property instead.
