Right to Manage: Fact Sheet
Background
The managing agent, presently Consort (under contract from the Freeholder), is responsible for setting our service charge levels, maintaining our building, arranging its insurance and ensuring individuals living here are not creating noise or nuisance to neighbours. As with any supplier, a contract can be terminated, which provides the continuing incentive for the managing agent to perform at a high standard and stay competitive on pricing. The management contract has never been put out to tender by the freeholder in the 14 years since Metro Central Heights was completed.
In order to control the contracting process, we need to action a simple vote to change our status to one of Right to Manage (RTM). Once we have got RTM, we can put our building management out to tender and select the best agent to manage us, both in terms of quality of service and value for money.
This is a real alternative to the expense of buying the freehold.
RTM came about via the Commonhold and Leasehold Reform Act 2002 and became effective in 2003. It is our statutory right to benefit from this legislation.
Pros and Cons of RTM
RTM will enable us to:
- ensure we get the best value service and potential savings.
- ensure genuine competitive tendering for insurance.
- negotiate with the managing agent for major upcoming projects (ie. external redecoration and roof replacements).
- specify when we want the external redecorations done (i.e. 2013 not 2011).
- stop unnecessary works and cost.
- hire alternative managing agents, if the existing one is under-performing.
Having RTM status also helps if we want to buy the freehold (and eliminate E&M's administration fees). However, there will be a one off cost of £120 per apartment for legal fees, in order to secure RTM.
RTM does not involve
- Extra work for residents.
- Making on-site staff redundant.
- Running the development ourselves.
Our Collective Aims for 2011
- Ensure that we have sufficient owners who want to go to RTM.
- Hire the "Right to Manage Federation" (an independent legal advisor) to conduct a vote of all owners for Right to Manage at MCH, and manage the RTM process.
- Win the Right to Manage: 50%+ of all OWNERS agree to proceed.
- Seek competitive quotes from some great management agents out there, with the view to keep Consort as our management agent at competitive pricing levels or appoint an alternative management company of our choosing.
- Complete this year BEFORE Consort are due to embark on any major building work.
What's Next?
Your Resident's Association has done the hard work - we've selected a partner in The Right to Manage Federation, who have experience of securing RTM for large Peverel managed developments such as ours, and being not-for-profit offer a great value service. They do the following:
- offer a one stop shop approach; managing the whole process and timeline for it, but leaving all decisions to the democratic vote of our community.
- provide a comprehensive service at low cost to flat owners.
- create a company for us whereby all OWNERS are entitled to become shareholders with individual liability limited to £1.
- get the process done in as little as 5 months.
Costs
There is a three step process we will be following through the right to manage process.
The first step is for the residents association to contact every owner we can at MCH to ask if they wish to acquire the right to manage. This is what we are doing now.
The second step is hire the services of RTMF to have them certify we have reached the '50% plus one' threshold of all legal owners at MCH. This will initially cost £600; however, we will be using the funds already in the coffers of the residents association so it costs nothing to you.
Once RTMF certifies that 50% plus one of all legal owners have indeed expressed the wish to acquire the right to manage RTMF will guide us through the entire legal process. The cost for this third and final step is £20,400 plus any contingencies. Our most conservative and prudent estimate is that it may cost up to £120 for each legal owner. We have reached this figure by adding an extra £5,000 to cover for contingencies (in case the freeholder appeals and to cover the cost of sending statutory notices to untraced owners for example) and assuming only 50% plus one of all legal owners at MCH sign up to the right to manage. This is the worst case scenario. Of course, the more owners will sign up to the right to manage, the less expensive it will be for each of us! Cheques will be collected later, with the official ballot papers.
All costs incurred will be fully documented and any money paid into the funds to cover the right to manage process that is not be spent by the end of the process will be apportioned and reimbursed.
The End Result?
- Efficient estate management - good for everyone, owners, tenants and managing agents and the staff who work here (who enjoy a good working relationship with residents and would likely be offered a post under new management).
- A potential increase the value of your flat, with more control over service charges and how they are spent.
I have questions
We are hosting two drop-in Q&A sessions on Saturday 12 March at 1:00pm and Monday 21 March at 7:30pm. If you can't make either of these you can also email us at ra@metrocentralheights.com.
What do I need to do?
We need you to confirm that you agree to go ahead with RTM. We can only proceed to the legal ballot if we have 50% of owners in agreement. Please contact us as soon as possible, by email to rtm@metrocentralheights.com, or by post to:
The Resident's Association Mailbox,
Metro Central Heights,
Newington Causeway,
London SE1 6BW
to confirm that you want us to go ahead.
Web Links and Media Articles
http://www.rtmf.org.uk
http://www.independent.co.uk/money/mortgages/leaseholders-take-on-the-managing-agents-2198279.html
http://www.guardian.co.uk/money/2011/feb/12/peverel-property-management-tenant-rebellion
http://www.dailymail.co.uk/money/article-1324001/Homeowners-concerned-managing-agents-charging-sky-high-fees.html