Increasing legislation
As the sector has become increasingly more regulated, many landlords are finding they are not up-to-date with the latest regulations. Freeholders, RTMs and RMCs who have been running their block diligently, are sometimes now finding themselves in a position where new legislation has overtaken their desire to act sensibly. Accountability to leaseholders and the local authority has increased rapidly with serious personal consequences being placed on the individual or board of directors, to the extent that one can now even be charged with corporate manslaughter.
Often we are asked to take over the management of a property because there has been a problem in one or more of the following areas: -
No accounts
Lack of proven historical expenditure will have a detrimental effect on the value of the property and make it difficult for leaseholders to sell. Leaseholders of properties with four or more flats must now receive certified annual accounts.
No forward planning
One of the difficulties facing freeholders and RMCs is the forward planning of major works including roof, communal boiler systems, etc, which are required as the life expectancy of the item comes to an end. The exercise involves the scheduling of a programme of these works and the ongoing collection of funds (if allowed for in the lease) in preparation for the work to be carried out. A leaseholder receiving unexpected high service charge demands may be unable to pay and without funds the works cannot go ahead.
Ground rent
This may only be collected if accompanied by the correct notice. Leaseholders do not have to pay if the notice has not been issued in the correct format before or with the demand.
No or incorrect service charge collection
Budget and service charge demands have to be accompanied by correct notices informing leaseholders of their rights. Failure to do so can leave the landlord, RMC or RTM open to the possibility that leaseholders can legally withhold monies or that service charge expenditure cannot be recovered.
The building has fallen into disrepair
If a lack of maintenance has let the building fall into disrepair and building works become imperative, an LVT may argue that the management has been negligent in maintaining the building. The freeholder, RMC, RTM or agent may then be liable to pay the estimated difference between the cost of maintaining the building and the additional costs that result as a lack of programmed maintenance.
Insurance
The freeholder has to insure the buildings even if there are insufficient funds collected from the lessees to pay the premiums.
