I own a London flat and for many years the subpar service from the property management company has grated on me. I’ve lost track of the number of emails that have gotten no reply, the number of unexplained costs and broken promises on things that are supposed to get fixed. I’ve found their all-round incompetence infuriating.
It’s a terrible system: you pay for the building upkeep and building insurance, yet have no say in how your money is spent. All of which leaves you out of pocket and feeling frustrated. Managing agents are unaccountable which breeds extreme inefficiencies, people don’t care when they’re spending other people’s money, especially when there’s no one to answer to.
To make matters worse, one of the reasons your service charge is so high is because your managing agent often profits from your suppliers. I was being naive by thinking managing agents use the best suppliers at the best price. You will find most managing agents either own the companies that are providing services to your building or are being paid commission. They don’t have your best interests at heart — it’s scandalous.
A key reason so many property management companies provide terrible service is because they know it’s hard to replace them. They don’t operate in a free-market economy. If a restaurant provides poor service you don’t go there again, if your gym is over-subscribed then you cancel your membership and join another one.
But when your managing agent provides terrible service, what you gonna do? You pay their wages and are supposed to be the customer but they’re employed by the freeholder and their contract is guaranteed to be renewed. You can’t help but feel helpless, frustrated and annoyed.
Like many, after a while my frustration boiled over. It was seeing the same persistent problems that weren’t being addressed and I’d not received a response to one too many emails.
Like you (I’m guessing) I was aware of the Right to Manage (RTM) which was introduced by the government to give leaseholders a means of replacing property managers. But after doing some preliminary research it seemed like a choir. However, I was wrong. And that’s the reason I wrote this post. Once I got stuck in, I realised it wasn’t that difficult. But there was nothing online that properly explained the right to manage process and how to get the support from leaseholders.
So take what I have learnt from speaking to numerous people and posting in forums and start the Right to Manage process in your building. You’ll save money and have a better run building which will increase the value of your property and make the residents happier to boot.
Right to Manage qualifying criteria
Before the right to manage process starts, you need to make sure your building is eligible and passes the following criteria:
- A qualifying tenant is a leaseholder with a term of more than 21 years and your building must have at least two-thirds of the units let to qualifying tenants.
- Your building can be part-commercial but the non-residential part must not exceed 25% of the total floor area.
- RTM does not apply where the immediate landlord of any qualifying tenant is a local housing authority.
Based on my experience the RTM qualifying criteria meant 20% of the flats where I live weren’t qualifying tenants. Many new build properties have a percentage allocated for the local housing association and these flats don’t apply.
The building where I live has 80 flats, which meant 60 were eligible to participate in the Right to Manage. But, you still need 50% of the total flats, so in my case 40 flats, this was a participation rate of 66% of the qualifying tenants.
The chances are, your building passes the RTM qualifying criteria. So now what, how do you get the support from enough qualifying tenants?
Right to Manage process
Before you can start the RTM process you need to know that you have support from enough owners (otherwise it will be a waste of time and money). If you’re disgruntled with your managing agent’s service then I’m prepared to bet that most are. The part of the Right to Manage process that needs the most effort is the canvassing of fellow owners.
If I had to boil it down, it’s this: you need to collect email addresses from as many owners as possible who will support your Right to Manage application.
Think of it as a marketing campaign that involves emails, letters, flyers and phone calls. It’s easy to get put off, please don’t be. You’ll be surprised how quickly you’ll gain the needed support. And it only needs one person to do all of this, however, you may find you get support along the way. Here’s how I went about it:
1) Email owners
Does your building have a resident forum? Quite often, residents create a Google or Facebook group. If your building doesn’t have one, then create one and advertise it on your notice board, you’ll quickly get sign-ups. These groups are a vital way to contact other owners.
If you already have a group, then you should have an easy way of emailing all the members, contact the admin of the group if you need help in seeing who’s a member.
You can post about RTM in your resident’s forum, however, this won’t be as effective as emailing everyone individually. This is what I did. Here’s the general idea of what I wrote (it’s obviously worth emphasising the problems in your building).
I would recommend sending emails individually vs one email to a large list. A personal message will get more attention and a higher response rate. I made this process easier by creating an email template in Gmail which allowed me to insert my RTM message many times over and saved me a lot of time.
2) Email letting agents
It’s common to think you won’t be able to get enough support because many of the flats where you live are let out. I would estimate that 65% of the flats were I live are let to tenants. However, it’s easy to contact owners via local letting agents. Here are a few tips for contacting as many owners (or landlords) as you possibly can:
- Search your building address on Google for flats to rent, e.g. “123 Main Street, London flat to rent” this will return estate agents that have flats in your building.
- Search for “letting agent near me” and build up a list of local agents to contact.
- I phoned the lettings department if I didn’t receive a reply after a couple of days. This was often the most effective way of getting through to the right point of contact.
I found all the estate/letting agents I spoke to friendly and understanding — they were happy to forward my communication to the landlords they worked with. Here’s an example of what I sent to my local letting agents.
3) Write to owners
After I’d emailed everyone via our resident’s forum and contacted all the local letting agents, I wrote a letter and posted it in all the mailboxes from flat numbers that hadn’t replied to my emails. This was just an adaptation of my original email.
Once you have a few owners on-board with your RTM application, I’d recommend mentioning this in your communications. For example: “Dear owner, 25 fellow owners would like to contact you in regarding to …”. Having the support of other owners is persuasive so you should mention it.
4) Follow-up emails
After about 10 days had gone by, I followed up with anyone that hadn’t replied to my first email that I sent via our residents Google group. Here’s what I sent.
I also followed up with letting agents where I knew they managed flats and I hadn’t received a reply yet. Landlords don’t want their tenants being disturbed so it’s worth repeatedly sending out your communication.
Some owners will reply to your first communication, others on your second or third.
5) Knock on doors (optional)
This is a final resort which I didn’t have to do. If you’re still a few participants away from making your RTM application then you can knock on doors.
When the resident answers, tell them about your RTM application (they should have read your letter or received an email). Give them a letter and if they are a tenant ask them to forward it to their letting agent or landlord. I would state something along the lines “your landlord still hasn’t responded can you make sure he/she gets this message and replies?”.
Finally, you will need a simple way to keep track of who has and hasn’t responded. I used Google Sheets for this as it’s free and makes it easy to share with other owners. You will probably find that some owners want to help, so having a document for all to see and edit is useful, here’s an example.
Also, I would recommend using Google Sheets for keeping track of emails you have sent. I had 60 email addresses from our Google Group which I put into a Google Sheet and keep track of who had and hadn’t replied. This made things easy when I needed to know who to send follow-up emails to.
How long does it take?
Speaking from experience, it took me about 3 weeks to get enough support. I followed all of the steps above (but I didn’t need to knock on doors). I would estimate that 65% of the flats where I live are rented out which you can argue makes the RTM process more time-consuming.
You have enough support, now what?
You need someone that can submit your RTM application and set up your company once you have enough support. You’ll probably need to pay someone for this unless you have a legal background or feel confident in doing this yourself .
Right to Manage costs
I contacted a few RTM solicitors and the prices varied a lot, anywhere between £30 and £300 per participant (flat). So in my case (using the cheaper quote) that would be £30 x 80 flats = £2,400. Your freeholder is allowed to charge “reasonable costs” which I was advised could be between £500 – £1000 (if charged at all). In the end our freeholder didn’t charge anything so it was just the solicitor costs .
The total cost of your RTM application will be divided by the number of participants which means those that haven’t participated don’t get to pay. However, once your RTM application is successful and you start using a new managing agent, the costs you have incurred can be charged as a “setup fee” by your new managing agent which are charged to everyone.
This means everyone pays eventually, and those that have already paid can be reimbursed or given a credit. This makes everything more democratic and means your overall cost will be lower (as it eventually gets divided by every property owner in your building).
I spoke with one company that specialises in Right to Manage and they send out individual payment requests to all the participants in your RTM application. Most solicitors won’t do this though, so you’ll either need to send one payment from your bank account and gather individual payments from everyone else or do what I did and send an email to everyone with the payment request with a payment reference (using their property number).
Finally, most of the solicitors that I spoke to offered a refund if the RTM application failed. Unless there’s something unusual about your building then your RTM claim should be almost guaranteed. Several firms I spoke with had “100% success rates” which goes to show there’s very little that can stop your RTM claim unless paperwork has been filed incorrectly.
6) Send next steps email
Once you have 50% or more of your building in support, you can let everyone know what the next steps are. In this email, you can explain the costs and who you’ve selected to carry out your RTM application.
This keeps everyone in the loop and gives everyone an opportunity to suggest a cheaper option, or who knows, maybe one of the participants is a solicitor and can do it for free. I would give everyone about a week to digest this email and then move on to the next step. Here’s an idea on what to write.
Set up your RTM company
The firm you are working with will form your RTM company and register it with Companies House. At this stage you don’t need to know who all the directors will be, it only requires the details of one person, which is presumable, you.
However, you will probably know who wants to join your RTM company’s committee by now. These will be the people that responded and wanted to help you with your RTM application.
7) Sign membership forms
The firm you are working with on your RTM application will provide you with membership forms for everyone to sign. I was initially wary of this step as it sounded like a nightmare to get signed membership forms back from everyone. But there’s no need to worry as the original forms are not required, therefore a photo, scanned signed copy or electronically signed copy will do. The membership form you’ll be getting everyone to sign will look something like this.
I would recommend using electronic signatures, there are numerous cost-effective services that allow you to get forms signed. I used eversign which is about £7 for one month’s use — this made the process very easy.
8) Notice inviting participation
Once 50% of leaseholders have signed their membership form, your RTM solicitor will issue a notice of invitation (like this one) and invite any non-participating members to participate within 14 days.
9) Issue claim notice
Once 14 days are up, your solicitor will issue a claim notice on your freeholder who has 1 month to object or admit to your claim.
Shortlist property managers
At this stage, you should have shortlisted a few companies that you would like to tender for your property’s management contract. Once your RTM claim is successful then you will meet a few managing agents who will probably want to do a site visit and see your lease and your building’s accounts.
You and your fellow directors (assuming there is more than you) form the selection committee and decide who will manage your building going forward.
10) Acquiring your Right to Manage
If your freeholder admits your RTM claim or doesn’t object within 1 month you acquire the right to manage your building. The acquisition date is 4 months from the date that the claim notice was served.
Summary links and templates
Hopefully, what I have written above helps demystify some of the Right to Manage process. But if you have any question please leave them below or send me an email. Listed below is a summary of the emails and files I used along the way to gather support for my Right to Manage application.
- Emailing resident forum members
- Emailing letting agents
- Follow up email
- Tracker document
- Next steps email
I wish you luck in your Right to Manage claim but rest assured it will be significantly easier than you think.