Charlesons.

Putting up with unsatisfactory conditions can often seen to be the preferred option for long suffering leaseholders. An almost accepted way of leaseholder life is to wearily complain about poor quality maintenance while facing swingeing service charge rises and other ad hoc payment demands.

But why do leaseholders resign themselves to the idea of “better the devil you know?” When will they finally grab that old devil by the horns, insist on their lawful right to manage ( RTM) and replace with fresh, progressive block management?  Click here to find out more about your Right To Manage.

It’s not all bad news in the often put-upon world of the leaseholder. Despite often repeated attempts over the years to contest the usual unreasonable charges or prolonged delays in repairs, many do decide “enough is enough” and form their own RTM companies.

 

RTM companies increased in last three years

Recent surveys show that in just the last three years alone, the number of RTM companies increased by an average of four per cent each month. It’s no mean feat, given the ongoing uncertainties that have impacted the UK property sector over the same period.

In fact, since the Right To Manage was introduced under the Commonhold and Leasehold Reform Act in 2002, the number of RTM arrangements have consistently risen. Figures show that from 2004 onwards, RTM achieved average year-on-year growth rate of 9 per cent which produced 1,000 new buildings with a new RTM arrangement. Since 2015, the number of new developments with all types of ownership arrangements starting to be put into place surged by 25 per cent every year.

 

More than half of RTMs in south east

The figures seem to suggest that perhaps, it may be time to update the long held idea that most leaseholders everywhere remain in a long constant struggle to improve conditions with their current block management. Nationwide surveys indicate that the growth in new RTMs is also spread around the country. As might be expected, more than half of RTMs created in the last ten years occurred in the south east England with London accounting for nearly a third (30 per cent) of new RTM structures.

However, the second and third largest areas for RTMs over the past year was far from the London and south east bubble – it was in Hampshire and Devon. Although the growth rate was significantly smaller at 6 per cent.

 

Leaseholders focus on improving their properties

Analysts offer several reasons why the last decade has seen leaseholders increasingly taking up RTM. Following the 2008 financial crisis and the onset of recession and government austerity measures, it’s likely that leaseholders needed to urgently reduce their service charge costs.

More recently, the slowing of property price growth may have influenced leaseholders to focus on improving their properties. A similar reaction was thought to be the reason why houseowners were delaying moving plans during the slowdown. However, a leaseholder’s contract may stipulate that they must agree to pay the freeholder and the managing agents before carrying out any home improvements.

 

Much needed reform of particular practices

It was one of a number of grievances over “unfair” contracts and the leaseholder system that the Housing, Communities and Local Government Committee began to look into from autumn 2018. Another troubling issue that began to surface as the Committee began its investigations was over the often confusing ground rent payments – which are not covered by the service charges – and in some cases were found to have doubled every ten years.

 

As a result, in March 2019, the Committee called for further “wide-ranging” reforms, including the introduction of legislation to remove overly-high ground rents in existing leases.

Clearly, the leasehold system is under official scrutiny with a view to introduce much needed reform of particular practices. Contrary to popular belief, leaseholders have increasingly taken up their legal right to manage their building and bring in a new, and hopefully, a more progressive and enlightened management team.

Empowering the Leaseholder! CLICK HERE to see why Charlesons approach to Block Management provides ultimate RTM