Author Archives: Steve Roulstone Marla

20Jul 2012

Current Property News: Lettings Market strong but fluid.

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By Steve Roulstone

Over the last three years the market has been very strong and during the spring there were signs that it was slowing down amongst fears about the Economy and a double dip recession. I commented at the time that the weather was having a huge effect as people stayed put and the last six weeks I believe has confirmed this as the pent up delay has been released, at least as our office is concerned.

Record Numbers.

At most times of the year we are aware of the number of properties being let and actually proceeding at any time, but it has been hard work keeping up with the speed of events that the seeming release of pressure has caused. It would also seem that schools and catchment areas have had a lot to do with the decisions Tenants have been making as they prepare for the next academic year, which has subsequently led to an increase of 33% in the number of houses we would normally expect to let.

Unusual.

This Performance whilst excellent does not yet signify a long term trend even though we are hoping that it does and there is no sign of things slowing just yet, but supply of properties then becomes the next problem as we seek to replace stocks. There is of course a natural trend to this as existing Tenants give notice and the market is thankfully still very active in both areas.

National Trends.

The national housing figures for last year have now been released and these figures will be the subject of one of my blogs next week when I have had the opportunity to digest and understand them, but those that have already commented Nationally are confirming the continued rise as Private Lettings in the UK overtake the Public (Council) Housing stock and approaches 20% of the overall housing market throughout the UK.

Landlord advice.

There has also been a marked increase in the number of Landlords we have discussed the market with as we continue to advice on a whole gambit of property scenarios from flats through family homes up to houses of Multiple Occupation. All of which points to the continued growth in confidence in both the aforementioned economy and the rental market.

Continued learning.

All of this means that we have to keep up to date with the changes in legislation and ensure we refresh ourselves on this intricate market of ours. We do this by openly sharing all manner of daily situations to share knowledge and double check what we advice, bearing in mind our legal responsibility lies first and foremost with our service to our Landlords at all times, whilst ensuring we give the correct duty of care to our Tenants.

Change of tack.

 I do not normally change tack halfway through a topic, but I must take time to mention the open meeting held with the staff of our local paper the Staffordshire Newsletter this week, who went to great lengths to get as many Agents together that could attend to a business development meeting. Firstly it is good to know that the long standing major paper for Stafford is taking their part in the property market so seriously as to not only arrange the get together, but also to provide so many staff so we were able to understand  all aspects of what they provide, but also because of the innovations they are bringing to the advertising market. It just goes to prove that ours is not the only market where people need to be looking ahead at all times!

18Jul 2012

Tenant Advice: Letting Agents not always responsible.

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By Steve Roulstone

Over the last couple of weeks, two incidents have occurred where we as Letting Agents have been held responsible for the effects of us doing our job. The situations were different and in both that occurred, having reviewed what we did as a Company we would have to do the same again should similar circumstances occur. But in both cases the responses we received from Tenants whilst being understandable, we felt were unreasonable when you consider we were doing as we were instructed, or in other words, just doing our job.

 Landlord instruction.

The first concerned a Landlord, who we had in the past dealt with on a Tenant find basis, and after moving a Tenant in to the property, had heard nothing more until we received a phone call asking us if we would find a replacement Tenant as the previous Tenant had now left the house. We knew we needed to inspect the house as we were aware that several improvements were planned even after the last tenant, who was fully aware of the situation, had moved in. Having gained permission to enter we found the house in poor condition, with a garden that had not been touched since the winter and a staircase in a dangerous condition because the carpet had been removed leaving many exposed nails.

Tenant reaction.

We sent a communication to the Landlord, stating we were unable to deal with his property as it was unfit (from the point of view of holding viewings) for purpose. He subsequently sent the same e-mail to his Tenant saying this is what we had said about how she had left the property. This was not the case as we had no instruction to comment as we were not managing the house and knowing what had happened before, had actually advised we fully managed the property to enable us to organise the work for him as he lived many miles away but this did not stop the Tenant calling and complaining about our comments, which resulted in a complicated explanation as to what we were commenting on and that any issues from her tenancy were between her and the Landlord, not us.

Reaction.

The Tenant was angry because what we said had been taken out of context and I do not blame her, but asked to report on a property being ready for letting, we would have to say the same again and it was the Landlord who used our e-mail incorrectly, despite having a disclaimer instructing that the content was for the recipient only. Of course this is too small a case to take action against the Landlord, but it has resulted in a breakdown of trust and a Landlord being dis-instructed.

 Insurance issues.

The second problem was bought about because of the need for a house owner to be temporarily re-housed because of recent flooding, again, a situation that is fraught with difficulties and we, knowing the position the Tenants were in, moved heaven and earth to get them re-housed as quickly as possible. But this did not stop the Insurance Company telling the Tenants that both our charges and Deposit requirements were unreasonable. 

Different Trades.

Now far be it for me to comment on current Insurances rates! But I find it a little disingenuous of them NOT to consider what we were doing for their Tenant (i.e. following their wishes) and to place doubt in the Tenants mind, who, up until this time, had no knowledge of what a Letting agent does, why and how. All this did was produce a feeling from people who had already suffered badly enough because of the poor summer weather that they were being taken advantage of when nothing could be further from the truth!

Charges.

To comment fully on Tenant charges is another Blog all together, but we know that what we charge is far from expensive and we are on the lower side of what is charged in our local market place. But frankly, that is not really what was at question. If the Tenant wanted the property we had available and with the knowledge that Insurance Companies have that charges exist when renting through an agent I am somewhat surprised that they do not make allowance and make people aware as part of the service, and of course accept their customers wishes which means they have to accept our terms and conditions, instead to use the words used by the Insurance Company, they considered that ”both the charges AND the deposit (£100 over a full month’s rent) were unreasonable”.

Unavoidable.

Of course none of this will change no matter how many times this happens and of course we have gone through this many times before and will do so again when people need to be re-housed where Insurance is being triggered, but surely Insurance Companies should be the ones to supply a ‘Rental’ fact sheet not the Letting Agent? Of course when Landlords create problems we do have the choice to take the action we did, but the point of this blog is to show that sometimes, no matter what we do as Letting Agents, we will always appear to Tenants to be acting unreasonably!

13Jul 2012

Property Landlord advice: Why Manage privately if you would not sell privately?

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By Steve Roulstone

As a professional Letting Agent I have always believed that Landlords should use professional Agents to look after their property, these excerpts are from a similar view for Estate Agents and I am repeating them in full to show just how they compare. There are of course many more reasons once a property has been rented for using professionals in their trade, but the reasoning used here in developing a sale cross over very well and I believe make the case better than being adopted specifically for rentals.

Security: Would you normally let a complete stranger wander round your house? A good estate agent will always ensure the correct identity of a prospective buyer prior to viewing.

Credentials: An agent will also establish the ability of the buyer to proceed, following up any chain if necessary. Too many buyers say they are “cash”, only for the seller to discover down the line that the buyer has a property to sell and a mortgage to arrange. Agents are familiar with the many red herrings used by unscrupulous or naive buyers and can quickly sort the panel beaters from the embroiderers.

Viewings: One of the most misunderstood aspects of the sales process is the way in which viewings are conducted. Of course you want to sell your house, but there is a lot of psychology involved here. Anything you say, as a seller, is clearly biased and not based on helping the buyer to understand how your property could fit their needs, because you don’t know the buyer nor do you have any knowledge of their preferences. If anything you could put your foot in it. Many sellers try too hard to sell on a first viewing and distract the buyer with irrelevancies like how the boiler works. A first viewing is simply about the buyer thinking “could I be happy here?” A good agent will explore the property with the buyer’s needs in mind.

Valuation: Vendors are notoriously optimistic when it comes to valuing their property (as are certain agents of course, but that’s another story). The price you paid for your home, the amount you spent on it, the amount you need for your next purchase and the amount you need to cover your commitments are sadly all completely unrelated to the value of your property. In fact, whatever some agents and even surveyors might tell you, even the apparent “evidence” of what has sold nearby can be misleading. Buyers buy by comparison, so your property has to look good in relation to what is currently available for sale. It might appear to be an easy exercise to assess these competing homes, but only an agent knows why these properties have failed to sell. If you simply follow the apparent market then you are likely to end up on the same heap. The most damaging thing would be to allow your property to go stale on the market as it is likely not only to take some time to sell, but will probably end up selling for less than it could have achieved had it been correctly priced from the outset.

In view of the above it is little wonder that there is very little appetite for private sales in the UK especially in view of the relatively small amount of commission British estate agents earn in relation to their counterparts virtually everywhere else on Earth. Whilst there will always be tales of someone who did a great job privately these are certainly the exception to the rule.

My question having read and compared the clauses with our Industry is why the appetite for private rentals IS still so strong? Most problems arise once a Tenancy has started and it is mainly by getting one of the aspects listed wrong in the first place! The problem being that it usually remains undiscovered until later in the Tenancy, when problems arise. Then is the time that Landlords have to deal with the issue professionally and within current legislation and unless they are qualified and I obviously accept that many Landlords are either by design or experience, this is the time that mistakes can be made, but I would venture that there are far more properties under the Management of amateur Landlords than bad Agents! Furthermore, when the Agents are either with a professional body or members of schemes such as TPO then the standard of service must rise dramatically.

P.S The picture with this post is meant to raise a smile, I trust you were able to do just that!

11Jul 2012

Current Property News: London gap in house prices growing.

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By Steve Roulstone

The latest set of figures from the Land Registry House price Index, record prices from May this year and show the average house price split by County and Region across the whole of the Country.  The Headline Statistics concentrate on the average house price in the UK which continues to be disappointing after what was considerable hope that prices were recovering after the winter. But what the figures clearly show and the headline report fails to mention is that when looked at closer the gap between London and the rest of the country is continuing to grow.

London and the South East.

London showed an annual increase of 7.7% and the South East of 1.7% these two areas were (apart from the East) the only areas to show an increase. The stand out figure for me is the size of growth in London compared to the rest of the country and this does clearly show how an average price does not reflect what is still happening outside of the Capital.

Regional.

In the West Midlands for example, where we are based (as far as the collated figures are concerned) we have shown a monthly growth of 2.0% but we still have an annual decrease of 1.2%. This does mirror what we have seen and the level of activity Estate Agents are now reporting and reflects the overall monthly growth of 2%. But a quick glance at the rest of the Country and you can clearly see how many areas are still seeing depressed figures.

What happens in London.

Unlike the popular saying does not stay in London and even from my days in retail more years ago than I wish to remember, does eventually spread to other areas, but having seen the differential close for many years, it does seem that this effect reflects a period of sustained downturn and recession, but it is now so different that there is an argument for the Land Registry to split between London and the South East (or just London) and the rest of the Country.

True feel.

 It would probably be unacceptable from a political viewpoint, because of how bad the rest of the UK fares when considered against London, but it is probably the only way to get a truly balanced picture of what is actually happening outside of the Capitol. I like most who look at these figures on a regular basis do at times scan rather than study and I am sure like most who read them fail at times to see the true picture and for me separation should now be part of the reporting every month.

05Jul 2012

TPO Explained

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By Mike Edwards

What is TPO?

 The Property Ombudsman scheme has been offering a free, independent and impartial dispute resolution service to consumers who are dissatisfied with the service provided by registered firms for more than 20 years. If a dispute is resolved in the consumer’s favour, the Ombudsman can provide redress to place the consumer back in the position they occupied before the complaint arose. Resolutions are designed to achieve a full and final settlement of the dispute and all claims made by either party. Where appropriate, the Ombudsman can make compensatory awards in individual cases up to a maximum of £25,000 for actual and quantifiable loss and / or for aggravation, distress and inconvenience caused by the actions of a registered firm.

 Independence

 Whilst TPO charges registered firms an annual subscription, the Ombudsman reports to the TPO Council, the majority of which is made up of non-industry members. It is the Council who appoints the Ombudsman and sets his Terms of Reference (i.e. how the complaint process operates). The Ombudsman is required to report to the Council on a regular basis.

 The Ombudsman is not a regulator and does not have the authority to take regulatory or legal action against a registered firm. However, registered firms can be referred to the TPO Disciplinary and Standards Committee, appointed by the Council, which has the power to expel firms from the scheme and / or report them to the Office of Fair Trading, which has the power to ban firms from carrying out estate agency business.

 TPO is a member of the British and Irish Ombudsman Association (BIOA).

 Membership

 At June 1, 2012, more than 21,770 offices were registered with TPO. This figure includes 11,749 sales offices and 9,301 lettings offices. TPO estimates that these figures represented 93% of sales agents and 64% of lettings agents operating within the UK.

 Further information

The Ombudsman’s Terms of Reference, the Codes of Practice, Consumer Guides and other documents about the operation of the scheme are available at www.tpos.co.uk, together with previous annual and interim reports, further explanation of governance arrangements and a full list of registered firms.

 

03Jul 2012

Client Money Protection explained and TPO client survey.

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By Mike Edwards

Client Money Protection explained and TPO client survey.

Letting Agents can go bust (I know!) But when they do, it can be amid claims of owing landlords and tenants thousands of pounds, so here’s a quick guide to what Landlords and Tenants should look for to safeguard their money.

Letting agents are not regulated, which means anyone can open and trade as a letting agent without any qualifications or licence. Like any other business, if a letting agent stops trading, landlords and tenants become creditors and risk losing any rents or deposits held by the agent.

To stop this, several industry groups run ‘client money protection’ schemes – sometimes called ‘CMP’. Belonging to a client money protection scheme does not mean a landlord will receive compensation if something goes wrong – the schemes have terms and conditions, like time limits for claims and caps on pay outs, so check the finer points do not exclude your rental business.

The main CMP schemes are:

● National Approved Letting Scheme (NALS)

NALS will pay up to £25,000 for any one claim, with a cap for landlords of three months’ rent. The total top pay out for a single claim is £300,000, while the scheme will only pay £3 million in any one year.

● Association of Residential Letting Agents (ARLA)

ARLA will compensate a landlord up to a limit of £25,000. Landlord claims are limited to three months’ rent. The total payable for a member company is £500,000. In any one year, the scheme has a limit of £3 million.

● Royal Institution of Chartered Surveyors (RICS)

RICS will pay a maximum of £50 000 per letting agents, subject to an overall limit for the scheme of £5.3 million for any one year.

● SafeAgent

SafeAgent is not a CMP scheme, but an umbrella group for letting agents who are members of a CMP scheme. The aim is to promote money protection by displaying a single, recognisable logo that shows any money with a letting agent is safeguarded. Letting agents belonging to client money protection schemes should display a logo of one or more of the schemes listed above on their web sites and letterheads.

Even if you see the logo, still check the CMP scheme web site to make sure membership is valid. Some unscrupulous letting Agents say they are members and use the logo when client money is not protected. Don’t forget that just because the agent was part of a CMP scheme one year does not mean membership is still in force years later – check every year.

TPO canvasses members over CMP

The Property Ombudsman Scheme (TPO) is also aware of the importance of CMP as it is now canvassing member firms over the provision of insurance.

“Whilst membership of TPO requires all residential sales and letting agents to abide by the TPO Codes of Practice, have Professional Indemnity Insurance, and agents holding clients’ money to deposit this money in a separate clients account, it does not currently require residential letting agents to hold CMP,” explains Bill McClintock, chairman of the TPO operating company who is circulating a consultation document to members. “Given that the Code of Practice is generally accepted as the primary standards document in the industry, the omission of such an important aspect needs to be addressed. “This is something the board and the Ombudsman, Christopher Hamer, have been considering for some time and recent incidences of both landlords and tenants suffering financial loss means action on CMP is now imperative. Private residential lettings reportedly make up 17 per cent of the UK housing stock.”

The consultation paper sets out various options and points out that member’s of ARLA, NALS, and RICS are required to have CMP. Some letting and management companies acting as subcontractors also provide CMP on all landlord and tenant funds.

McClintock is asking TPO members which of these options, or an alternative fallback position that all TPO member firms without CMP must disclose in writing and actively flag its absence at the point of instruction or sale of services, they would prefer to see enforced through the TPO Lettings Code of Practice.

 “TPO and its Codes of Practice are part of a consumer protection regime with the firm objective of raising standards in the industry,” adds McClintock. “Whilst TPO cannot force agents to sign up to the Code, firms should see the Codes as enhancing the reputation of the industry and for those that are already members of TPO the addition of a clause requiring CMP will enable them to demonstrate to landlords and tenants that their money is protected.

“TPO is a not-for-profit company and will not itself offer CMP to member firms as a new revenue stream. It is not appropriate for TPO to offer such services but I believe it is appropriate for member firms to have such cover. However, members now have the opportunity to express what they think should be the minimum required standard.”

28Jun 2012

Property Landlord advice: Energy performance just not getting through.

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By Steve Roulstone

I have had cause of late to look at the tax allowance for Landlords in relation to insulating properties (Landlords Energy Saving Allowance) and with the intention of providing a good service for the Landlords we manage property for, I have been looking at how to get the message across in letters to not only the Landlords, but also the current Tenants who will of course benefit from lower bills, indeed most of the interest has come from Tenants who are able to claim grants against insulation costs in some cases at virtually no cost at all, in seeking permission to have insulation installed in loft or walls.

Little interest.

The problem seems to be that very few people are actually interested despite all of the talk around the Green Deal which is due to be introduced by 2018 and was again in the news last week, although the Government release gave very little content or actual information to assist you in understanding what this bill will mean to Landlords.  The problem though seems to be lack of knowledge of what is currently available and this is probably because it is still too little for Landlords to consider.

The Industry.

I have looked for information from one of the leading insulation suppliers to help get the message across but it would seem that not only do they have no literature to explain the current assistance Landlords can claim but have very little knowledge as employees either. This is a bit surprising considering the tax allowance of £1500 has been available for many years but what seems to be more surprising is that it is due to be phased out by 2015.

Landlords.

There is certainly very little knowledge amongst our Landlords and that is one reason why I wanted to go through this procedure, because as Agents we should always advise our Landlords, but apart from a release by the Residential Landlords Association which is very current, I have seen little other promotion or discussion.

Tenants.

You would think given the current legislation surrounding EP Certificates that Tenants would be on the ball! But since the introduction of EPC’s, we have carried out on well over 3000 viewings (as a conservative estimate) and yet we are still never asked for the EPC more than once a month. Roughly 1%. However, when Tenants are able to benefit from installing insulation at very little cost, then that is where interest does grow and why shouldn’t it?

Conclusion.

What this does seem to show is that whatever the end result of the Green Deal, what is on offer, is going to have to be easy to understand and attractive to all concerned if it is to be a success. Otherwise it will be ignored and clearly if this is enforceable then we will once again have further legislation that will produce a black hole for Councils looking to enforce matters such as Houses of Multiple Occupation legislation and indeed the current EPC legislation which only come to light when those who ignore it are caught. This is purely because Councils do not have the man power to seek out Landlords who fail to comply and the danger is that this legislation will fall under the same heading!

25Jun 2012

Property Landlord advice: Explaining who is who in Block Management. Part 2

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By Steve Roulstone

In part two of this Blog having explained the possible Management structures your property could be controlled through, I now move on to the reasons why the situation can cause confusion.

Different rules for different schools.

This is at the hub of this Blog because of my experience with so many sites from Management Company controlled to sites where the Freeholder still appoints the Managing Agent and the site is therefore not run by a Management Company Limited. So until you know the way in which the site you are considering is run you will not be able to understand for yourself. Not that any decision should be made to buy or not, rather by being aware, you will better understand how your property and your responsibilities fit in with the site. 

Residents Committees.

What bought this matter to mind at present and the reason I stated I would return to Freeholder managed with site participation, is because we have become involved with a site where the Freeholder allowed communication with the Residents through a Residents committee. The problem that occurred on this site was a lack of trust between one half of the residents of the site and the other half containing the committee. In this case the Freeholder has stepped in and instructed us how to manage the site which will allow us to look after our Clients interest as Managing Agents. This kind of scenario is unusual and would never be explained by the questions asked by your Legal Representative.

Legal position.

More importantly to me is the total lack of explanation of the legal position surrounding the obligations the Leaseholder now holds. Of course those that ask do not understand. Conversely, those who do not ask probably do understand. So we only hear from those who do not, but that is still too many. The Lease that they have entered in to explains fully their financial obligation and rights surrounding the charges they must now pay. As these include buildings insurance, grounds and internal area maintenance, as well as any funds being held in reserve for costly requirements that may be required at a later date, explains why these obligations should be explained in full prior to completing any purchase.

Speak to those who know.

What never happens is the purchaser phoning and speaking to the existing Managing Agent to enquire about the site and how it is run and to have the financial idiosyncrasies of the particular site explained yet the legal representative of the purchaser does ask a series of set questions surrounding this very subject, including current and past accounts. For me it is a simple step from this position to that of speaking with us and of course what could be better than an introduction and explanation of the manner in which the site is currently run.

Conclusion.

What I believe all of this misunderstanding dictates is that as a potential buyer of a leasehold property, it is right and correct that you not only rely upon the information gathered by your legal representative, but also ask to speak to the Managing Agent, because whichever side we work for and to be able to do both is not straight forward, we can at least ensure you understand how the site is run and that you fully understand what you pay and more importantly why. We will also be able to point you in the direction of the lease, which is designed to be the rule book for the way in which all parties must operate, but that is probably for another Blog!

21Jun 2012

Property Landlord advice: The responsibility for Tenants in rented leasehold property.

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By Steve Roulstone

It is strange how issues worthy of writing about as far as Block Management are concerned have been somewhat thin on the ground and then within the space of two weeks several matters arise which  are worthy of note. This time it is the question of Fire and Health and Safety information in a block of leasehold flats.

The Story.

What happened here is we received a letter from the Fire Brigade, telling us of a call out they had received from a resident at a block that we manage because an alarm was set off over the bank holiday weekend. The problem here was that the letter was accompanied by an invoice for a wrongful call out, effectively billing the site for wasting the Fire Brigade’s time. A fine in effect, which they priced at (and no doubt the courts would uphold) £500.00.

The Impact.

We phoned the Landlord, who self manages the flat (looking after the Tenant themselves) and informed them that their Tenant had failed to read the notice displayed on the ground floor, or that the Landlord when moving somebody in had failed to point out the correct procedure, which clearly stated that when the alarm sounded, the first person to contact was our service providers Chubb Fire. This was the mechanism put in place to ensure the Fire Brigade were not called out as a false alarm.

The Responsibility.

As I have confirmed here, it is not our role to advise sub-let Tenants how the site runs. Their contract is with the Landlord and his agent and that is clearly where the legal duty lies. But this was not the reason given as why the Tenant did not deal with the incident in the manner instructed. Rather because they were Polish they were unable to understand or read clearly the instructions. I will leave aside the course of action any Landlord should take in ensuring their Tenant is well advised although the answer does lie partly in that fact.

The Information.

Several years ago during our first Health and safety check of the site, I had held a heated debate with the Company charged with carrying this inspection out, about the need to have notices in several differing languages, to ensure we were seen to do our best to ensure everybody on the site understood the necessary safety  instruction. My point was that the walls of the corridors were only so big and it would be impossible to supply sufficient translations to cover all possible nationalities and there subsequent language needs.

The Solution.

There is a serious point here, which is that it is impossible to supply a copy for all possible language requirements. Therefore our solution was to offer free translation, which it is not that difficult to do, for all requested languages. This way, whilst the legal responsibility does not lie with us, as stated, the relationship is between the sub Tenant and the Leaseholder, we could be seen to do our best for our Leaseholders and to reinforce what was happening, we wrote confirming this as part of a change to what have been called site rules, which we advised all owners are to be handed over to all subsequent owners. We also confirm this when we are able through requests for information for new owners as purchase questions are raised by the legal profession.

The Outcome.

All of this though definitely confirmed that the current Landlord is wrong in their assumption that the cost was not the responsibility of the Polish Tenant who called the Fire Brigade in the first place because he could not read the instructions correctly, therefore they will remain liable for this cost. The fact that we were accused of failing to supply a translation sits squarely with the Landlord as we had not been asked to supply one. What remains a fact is that It is impossible for us to cover every eventuality, and Landlords should realise that they are the party, as the second signatory to the agreement along with the Tenant, that carries the responsibility for ensuring the Tenant is correctly informed.

18Jun 2012

Property Landlord advice: Explaining who is who in Block Management. Part 1

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By Steve Roulstone

As a Letting agent who also offers Block Management services, it is a common scenario for us to have Landlords who have just purchased a Leasehold property to question what is behind the charges that are linked to Leasehold properties. We feel this is because, whether purchased new from a developer or through a Private sale, it seems the information given by the legal profession in explaining why and what the charges cover can lack depth.

Part one- who does what.

So this Blog which is in two parts is to confirm the differing scenarios you can be faced with when buying a Leasehold property. You would think this part would be straight forward, but it is not, as we fulfil a role where we can be employed by either side of a responsibility fence and at times made to look as if we are on the side of the Freeholder and at others holding up the rights of the Leaseholders. Complicated it is, but here as ‘Part one’ are the differing Management structures.

Freehold Controlled.

The Freeholder, if a Right to Manage (RTM) Company has not been set up, will control who does run the site, usually through a Managing Agent that they appoint and this is where the major difference lies. The Agent is therefore beholden to its client the Freeholder. The Leaseholders still pay in the same way as they would under any RTM but it is the freeholder and not the Leaseholder that has the power to control the budgets. It can therefore seem to the uninitiated that the Agent is working against the Leaseholder especially if the Leaseholder does not get their way when considering the site requirements.

Freeholder controlled with Resident input.

This is why on many sites where a Management Company has not been set up either by the Freeholder or the  Lessees through RTM a Residents Committee will exist enabling lessee input into day to day decisions about the running of the site. This is where problems can occur, because clear lines of authority become vague concerning who can request what and with what authority. It is a situation I shall return to.

RTM

More often than not nowadays, plans are drawn up for the site to be handed over to the control of a Management Company Ltd, who will be written into the Lease as the organisation responsible for running the site and appointing a Managing Agent. Handover would normally happen once a site is complete; this allows the builder to run the site until completion, although the payments and expenditure items will be a liability of the Leaseholder from day one. The Management Company would then take over the formal running of the site and be run by Directors appointed from Leaseholders with again, the Lease directing how such appointments are made. These positions are confirmed through the AGM attended by all Leaseholders once a year. Once the site is completed, the Freehold is then also passed on to the Management Company, who may or may not as the Company decides, continue to collect Ground Rent.

 RTM with Freeholder.

The other manner in which sites are run is where the Freeholder retains the Freehold and collect Ground Rent, however the RTM Company continues to run the site is exactly the same manner as the Freehold owning RTM and in fact little will be heard of from the Freeholder under this style of Management. This would normally happen on a smaller site developed by a smaller builder, but once again the Lease will dictate the rights and requirements of the parties concerned.