When the Right To Manage was introduced, it gave more power to leaseholders over the way that their residential block was managed. The legislation was introduced to prevent poor management from Landlords.
In the whole, Right To Manage has been a success. However, there are some common problems that arise. Most problems can be overcome, and we advise that you have an experienced managing agent by your side to help you deal swiftly and professionally with any issues that crop up.
With regards to ensuring the block is managed and funded properly once you have taken control, we recommend employing a managing agent to manage the day to day activities. This will ensure that your block is properly maintained.
1. Ensure You Are Aware Of The Rights You Will Acquire
A common misconception is in the case of multiple blocks of apartments within one development. Right To Manage is for individual self-contained buildings or a self-contained part of a building. This means if there are separate blocks, each will need to obtain Right To Manage individually through separate Right To Manage Companies, should they so wish to.
2. Be Aware Of The Costs Associated With Right To Manage
Under normal service charges, a tenant will pay for the maintenance of the building. However, setting up a Right To Manage company has additional costs involved that likely aren’t covered in the service fee. These costs include Directors and officer’s insurance and secretarial fees, amongst others. It is important that those forming a Right To Manage company are aware of these additional costs, which tend to be nominal, but nevertheless provisions need to be made to ensure adequate funds within the Right To manage Company.
This can be a potential problem, as in some instance’s members do not separate the service funds and the company funds. Further issues can arise, especially at the beginning, when members push through improvements within the block without first considering the additional cost and ensuring the service fees can cover the increased costs. This is where an experienced managing agent comes in, to manage budgets and to ensure compliance.
3. Lack of Initial Funds
Some repairs or maintenance may be required before service charges are recovered. In this instance, it is important to first find out what monies are held by the Landlord in relation to the management of the block. If there aren’t sufficient funds, then it will be necessary for the Right To Manage members to add to this pot until such a time that the monies can be recovered in service fees.
4. Poor Management
Another potential problem is inexperienced Right To Manage members who aren’t aware of the responsibilities and liabilities of operating Right To Manage. Poor management can lead to repairs not being done, low quality or expensive contract work and inefficient service fee collection. All these issues can be avoided by utilising the services of a professional managing agent. A managing agent will ensure service fees are collected, handle all accounting issues, log and arrange repairs and regular maintenance and much more.
Though there are a few potential difficulties with Right To Manage, they’re not unsolvable issues. Right To Manage is still an extremely attractive proposition for leaseholders, providing them with the power to manage their residential block in the way they want it run.
Our advice is to ensure that you and your other members have done the research and understand what your roles and responsibilities are. It is also important to ensure you’re aware of whether or not you are eligible to even apply for Right To Manage, as if you’re not, you’ll lose any costs you’ve incurred and the Landlord will maintain control.
If you’re interested in forming a Right To Manage company, get in touch, we’d be happy to help you through the process.