Some right to manage facilitators are tying in leasehold blocks to management contracts that are hardly less draconian that the ones imposed on them by their freeholders.
Members of the Leasehold Advisory Service stakeholders meeting last week were aghast to learn that some RTM facilitators, who may receive a commission, are signing up management companies on TWO or even FIVE-year management contracts.
No section 20 has been issued to gauge the views of all leaseholders, including those who are not members of the right to manage company, and the management companies are granted generous six-month notice periods.
“Wow! Blimey!” said the meeting chairman. “Six months on notice? Most managing agents only get three months.”
Some leaseholders have been challenging the practice, arguing that RTM facilitators or RTM companies cannot enter into a long-term contract without having a section 20 consultation owing to the monetary size of the management contract.
The stakeholders, who included senior managing agents and trade body representatives, argued that a section 20 in these cases was essential for the harmony of the RTM block.
If there is not agreement on the managing agent then there is a fissure through the block, it was said.
“I would suggest that if you have a majority of leaseholders who want manager A and a right to manage company wanting manager B then you have a more divisive leaseholder body than you had before you started,” was the observation of one senior figure.
There is also the question of whether all – or any – leaseholders are aware of the commissions paid by an incoming managing agent to the RTM facilitator.
It was particularly important to have an above board consultation in cases where the RTM membership is only just over the 50% threshold.
“That is exactly why you should be consulting on who will take over the management,” it was said.
(The LEASE stakeholder meeting takes place under Chatham House rules, which means speakers are not identified.)