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19 June 2017

We are a group of 20 leaseholders and we want to self-manage our block of flats. Is this a good idea?

This article was first published in City AM, Friday 16 June 2017

Poor management, unreasonably expensive major works, higher than average insurance premiums and unresponsive landlords are amongst the many reasons why leaseholders such as yourselves invariably look to take control of their blocks.

Whilst you will view your block with greater care and interest, self-management – where the leaseholders collectively and directly manage the freehold without the assistance of managing agents – it’s not easy.

You must be familiar with the terms of your leases, which are not always straightforward, and there is an abundance of Landlord and Tenant legislation to get to grips with. A failure to observe the legislation can cap the amount of money that the landlord can recover, lead to criminal sanctions or invalidate the buildings insurance, to name but a few consequences.

Careful thought should be given to leaseholders who did not acquire the freehold with the others or to leaseholders who persistently breach the lease (unauthorised alterations, short lettings, arrears). Exerting authority over your neighbours, or pursuing them formally, can be tricky.

It may be appealing not to collect contributions towards the reserve fund or delay any major works. However, this can be detrimental to the upkeep and ability to maintain the building in the long term.

On the sale or re-mortgage of a property, the leaseholders will be required to complete and supply information on behalf of the landlord. These are questions leaseholders often may not feel comfortable responding to or are unable to do accurately, causing delays or worse, preventing the sale of the property, creating ill will amongst neighbours.

You’ll also need to negotiate contracts for services such as lift maintenance to employing a cleaner and gardener. Dealing with matters on a mutual understanding or in reliance of each other’s goodwill, without observing the terms of the leases or the legislation, can land you in hot water.

Whilst there is no statutory requirement to employ a managing agent or to have any relevant experience, you can see from the above why it is in your interests to employ accredited managing agents to ensure that they satisfy the relevant legislation and observe the obligations on the part of the landlord under the terms of the leases. Otherwise you could land yourself and your neighbours in trouble with the law.

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