What About Freehold Homeowners?
By admin | August 4th, 2010 | Category: Past Articles | 4 commentsA lot of questions have been asked as to where Freehold Homeowners stand in regards to how they can go about removing their property management company. Can they go RTM?
Fortunately for TTAS, ‘Anon’ has kindly replied to this question that was raised on an old post – which we thought would be of interest to everyone so we have highlighted these facts below:-
Freeholders are not entitled to participate in the RTM process – and if an RTM claim succeeds, then the houses are bound to pay thier service charges to the new property management company. In theory the charges should go down – one reason for invoking the RTM in the first place.
So as a householder what can you do? Well you could take the lead in setting up a Residents’ Association and having it recognised by the freeholder – this is often the first step to establishing interest in the RTM process.
We have about 20 flats, and four houses, two of the houses are residents’ assoc members, but all benefit from the reduced charges we are now paying. So you can agitate, campaign, generate support and help your neighbours in the RTM process, you just can’t be a director or member of the fledgling RTM company.
I know that PPMG companies, are trying to use shared roads, houses as part of a leasehold develpoment etc as grounds to oppose an RTM claim. I also know from our counsel, having successfully challenged a counter notice, and without having to resort to the LVT that there is a lack of case law in this particular area, but not surprising because in legal terms the Commonhold & Leasehold Reform Act is still very new.
As I always say here – pay for the best legal advice your RA/RTM company can afford to make sure the RTM process is followed correctly.
Anon also raised some good points in regards to RICS and their charter:-
RICS publish a book called: Service Charge Residential Management Code and Additional Advice to Landlords, Tenants and Agents.
You don’t have to be a RICS member to buy one, our RTM company has just dones so: it’s £20. I’m sure it mirrors the code discussed in posts above. Also, if you’re searching for a new PMC, ask the company to send you a copy of the code, with their standard contract.
See: http://www.ricsbooks.com/productInfo.asp?product_id=7552
As for buildings insurance, the RTM company is at liberty to change provider, I believe this is a legal entitlement. We did so when we invoked our right and got a £5k refund from the old company and the new policy (like-for-like) was exactly half what Solitaire were charging through their broker. The refund was also sent direct from the broker to the new PMC. You have to go through a broker as neither a PMC or RTM co can be FSA regualated, so cannot buy a block policy. By the way, we also took out directors liability insurance too.
And a final point on RICS… it’s a big plus to look for a RICS company to take over as your new PMC – especially as RICS has a scheme for bonding your service charge funds. But beware of PMCs that employ RICS qualified surveyors, but are NOT an accredited RICS practice. We nearly got caught with this, and a simple call to RICS or a search on its web will identify those companies duly accredited.
Incidentally, on a recent search for a new PMC, we discovered one RICS accredited practice that was fined £4k by RICS for a disciplinary breach, subsequently upheld on appeal. Anyone ever seen ARMA fine a shoddy property management company? I bet not.
Some truly useful information here and once again we express our thanks to ‘Anon’ for posting this on TheTruthAboutSolitaire.
This is very interesting…
… following the recent disappointing news that the new Government won’t be looking into the legislation surrounding freehold as we had all hoped, comes this announcement:
http://www.bbc.co.uk/news/uk-10910048
Basically, for every home they authorise to be built, local councils are now going to receive a grant equivalent to the council tax generated by that new home. Whilst this is intended to generate new housing supply, my worry is the unintended consequences it will bring within the context of current housing law:
Councils already have it easy as far as new homes are concerned. Frequently the local council assumes no responsibility for the upkeep of roads, verges and lighting in new developments, ceding this responsibility to the freeholder and their managing agent. So when a freeholder buys a house, they buy merely an island of land within a larger plot ‘managed’ by the likes of Solitaire. Leaseholders may have more say over this situation, with LVT and RTM, but are for all intents and purposes in the same boat.
If councils are now going to be encouraged to authorise new developments with financial incentives from central government, these new developments are likely to repeat this pattern on a much greater scale, with larger and larger developments of ‘hostage freehold’ and leasehold apartment blocks. Councils will be following the same logic as the developers: squeeze in as many units as possible. More units equals more cash.
Notwithstanding the planning and environmental issues of unfettered development of new housing, this ‘boom’ will perpetuate the current iniquitous state of affairs where councils wash their hands of their statutory duties, leaving these duties to profit-motivated private companies. More housing stock is a good thing, but not if that stock is simply used by freeholders and management companies to lever profits out of the occupants. It’s almost as if we’re living in feudal times.
More housing stock, yes.
More private property management companies, no thank you.
Jon,
We are living in feudal times (and I’m taking about the UK, not another country that was recently referred to as “mediaeval” by a government minister).
Time for another “Peasant’s Revolt”
My estate has 30 freehold properties, and no leaseholds. There are small grass areas and a few flower beds. We each pay £40 pa rent for these common areas and Solitaire manage them – for which we pay them £3200 to collect service charges and pay the gardening contractor. We also pay fees to the landlord for their permission for changes at the Land Registry eg remortgage, sale. The Residents Assosiation enquired about buying the common land and the landlords are asking for all 30 households to confirm in writing that they are interested before they will consider the request. Is that right? And do you have any advise on how to proceed if the landlord agrees to a sale?
Zocco,
If you were a leasehold development you would require 51% agreement to proceed with Right of Enfranchisment (buying the freehold).
I am fully aware that freehold properties are not covered by this particular legislation. One positive aspect to your case is that the landlord has in theory been responive to a sale. Before committing to soliticor or barrister fees, I suggest you go online to http://www.lease-advice.org.uk which may give you some pointers as to where you stand.
Sorry I cannot be of more help on this one – hopefully there may be someone else out there who knows more?