Right to Manage/ Breach of Lease

[Donkin]

I have hit both of the Leaseholders of my property with Breach of Lease notices. They have responded by asking for the Right to Manage.

from the literature I cannot stop there RTM but
Do the Lease Covenants stay in place?
Do I as Landlord lose the right to keep them to their Lease?

ie one fitted a satellite dish in breach of the lease, during repairs to that part of the roof it is not possible to be replaced. Would I lose the right to refuse it be replaced elsewhere if the RTM is formed?

[Poppy]

I'm sorry that the situation has come to this point.

So, have they actually set up a company yet? Have they started down the proper legal route? You are entitled to become a member of this company, if the lessees take it that far.

Regardless of whether the situation goes as far as the lessees legally managing the building, the lease remains in force and must not be breached by the freeholder or the lessees.

On a softer more conciliatory note regarding the satellite dish, even though the lease appears to prevent its attachment to the exterior of the building, would you consider specifying a location that you could be happy with? I personally think that satellite dishes look awful and I hope that technology will be used to make the damn things invisible.

[Donkin]

Thanks for the post.

Got the Right to Manage form the other day.

Re the satellite dish, we live in a conservation area and they are not allowed under any circumstances. I didn't want the council etc blaming me for their dish which wouldn't get planning permission if they had asked. (A very efficious Conservation Officer)


Now comes the hard one. If they go down the enfranchisement route, what happens with the Leases. As you probably know from my previous posts my flat does not have a lease associated with it.


Who writes any new lease and will it reflect they existing leases?
or Are three new leases written and who writes those?

[Poppy]

Donkin, I must say that your situation is complicated by the fact that your part of the building is owned and occupied on a freehold basis. In fact that may work in your favour, but I don't have proof of this.

If you think the lessees will attempt to go down this route I would start searching for a suitable solicitor now. I think if you leave finding a solicitor until after formal notice is issued, then you may struggle to comply with time limits set by Leasehold Reform Act 1993. You should find a firm who will look after your interests, that has relevant experience, value for money (well that’s for the other lessees to pay for), keep you informed of progress.

What are your thoughts on the lessees' ability to pay for all this? It will cost them tens of thousands of pounds.

Lessees have the right to apply for new leases.

[Donkin]

Poppy, your making me happier by the day.

If it is tens of thousands, it isn't going ahead.

Upstairs came into money not so long ago. But by the amount hey have spent: fire escape last year £15k, 2 cars £50k, kitchen?, bathroom?, windows?, total redecoration by contractors? so they had money to burn but refuse to replace their back door. The money might be running out.

Downstairs, as you may remember, we are persuing £250 she owes so she is not in a position or doesn't want to pay tens of thou.

Another thing about the cost is: what do they get out of it? other than me not being able to sign my letters "Landlord and Freeholder"?

[Poppy]

If your lessees actually went down the collective enfranchisement route and were successful, they would end up owning two thirds (?) of the freehold. That would entitle them as owners to make decisions about how the building is run and how much to spend.

It would mean a consensus would need to be found on every decision. It would become (in my opinion) painful for everyone concerned. They would need to spend time thinking about and organising maintenance. Not everyone is up to that or can be bothered.

From the websites I have found that discuss the merits of collective enfranchisement and shared freeholds, I have gathered that decisions are hard to come by. Sometimes important maintenance is not carried out because one or two lessees/freeholders resist paying for it and because they too are owners, what exactly can you do to them? Also what tends to happen is that the good lessees/freeholders who organised maintenance and insurance, will over time move out and some profiteering BTL non-resident person will buy and things go downhill because no one wants to fill that void. Worse still is if work is agreed, carried out, but not paid for. That leaves a shortfall in the accounts. If you then think "I'll sell up", when the purchaser discovers what maintenance is outstanding and the bad state the accounts are in - they'll walk away.

As a sole freeholder, I want to stay in control and ownership of my building. I have asked my lessees that if they intend to sell please give me first refusal. The advantage to them is:
- no estate agent fee
- no need to extend the lease
- no chain involved
- and if they have AST tenants, no need to evict

From what I can tell, the only time that collective enfranchisement can be deemed successful is where one person already owns a majority of the flats/leases and then collectively (huh! by themself) enfranchises by buying out the old freeholder and becomes sole owner.

Food for thought? It all comes down to the old saying "too many cooks spoil the broth".

[Poppy]

Oh, one last salient point. Who is advocating collective enfranchisement because of the large fees involved? Can you tell who it is yet?

[Donkin]

Re Your post about stopping maintenance.

Thats why I want to know about how RTM which is going ahead and Enfranchisement (which I think is the next logical step) affect the Leases.

The existing Leases allow any Covenantee (Landlord, Leaseholder, Owner and Occupier) to instigate maintenance with two weeks notice and the costs are apportioned appropriately.

By not having a Lease I become a Covenantee by virtue of being an Owner. But the RTM company will not be able to ask for payment of maintenance I can instigate, as I do not have a Lease.

I think I also fall outside the requirements of the C&LR Act 2002 which requires the Landlord to give 1 months notice etc before instigating maintenance over £250 per flat.

Hopefully it will all work in my favour. :D

The next thing is if I am right in my thinking and the RTM company realises this. Can the RTM disolve responsibility back to the landlord? and if they can can I charge them for my services?

[Poppy]

I think it’s time that you employed a solicitor. In my opinion, you should start by focussing on reasons for the lessees NOT to exercise their right to manage particularly as you are a resident freeholder and do not own a lease. Basically you now need to pre-empt their actions and make them come to their senses.

[tenant29]

The Office of the Deputy Prime Minister has issued a brochure called "Residential Long Leaseholders" and the conditions at top of page 61 may cover your particular situation .

"RTM does not apply to converted buildings with 4 or fewer flats where the landlord lives in one of the flats as their only or principle residence."

[Poppy]

Donkin, I have sent you a PM.