In order to manage a Freehold or RTM (Right to Manage) process successfully, leaseholders have to navigate through a number of complex, moving parts.
A freehold acquisition, or RTM process, is not linear, and can sometimes take up to two years depending on the legal complexities involved. But this should not dissuade anyone from trying to purchase the freehold of their building: there are significant benefits to doing so, and thankfully there is invaluable help for those wishing to begin an acquisition process.
Freehold acquisition project managers offer a variety of services to help clients looking to take over the freehold of their building.
They provide invaluable advice, support and guidance for clients as they move through each stage of the process. They can answer questions, resolve issues, and sometimes - just provide reassurance about each and every single step as leaseholders take the transitional step to become freeholders.
Here's a peek behind the curtain at the types of services that freehold project managers can provide, and why they are so valuable to a leaseholder looking to make a freehold or Right to Manage claim.
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1. Recruit your neighbours
When it comes to purchasing the freehold of a building, at least half of a building's residents must commit to the process. This figure initially sounds daunting to leaseholders who may not even know half of the building's residents, or who may be unsure as to how to approach them with such an issue.
Thankfully, even though half of a building's residents need to agree - it doesn't mean they need to be involved, and half could be as little as 2 additional residents in an apartment building which only has 4 flats.
Acquiring commitment can be made easier through a professional freehold project manager. Project managers will explain the process to each and every resident, and offer the chance for them to ask questions. A project manager is better placed to answer these questions than the initial leaseholder group, because they can provide expert opinion and professional advice, to address reservations and propose solutions for anyone’s situation.
2. Check that you’re eligible
Once signatures have been collected, residents who are willing to join the collective group taking over the freehold acquisition must then approach the landlord or leaseholder with a claim to buy the freehold or respond if this has been initiated by a freehold sale originally.
This process can also seem daunting - especially as it is entirely at a landlord or existing leaseholder's discretion to refuse to come to an agreement. Freehold project managers can again assist with this by providing the correct written or verbal structure in which to approach the conversation of purchasing the leasehold.
Before a leasehold collective group can engage with their landlord, they must ensure they meet the legal eligibility requirements - otherwise the process can fail.
Once again this is where project managers can step in to ensure that every member of the acquisition group - and the building itself - meets the correct legal requirements, which are:
- The building must contain at least two flats or apartments
- Under 25% of the freehold building must be being used for non-residential purposes, i.e: an office or shop
- Two-thirds of all flats or apartments in the building must be owned by leaseholders with long leases
- Half of all flats or apartments in the building must be owned by leaseholders willing to purchase a share of the freehold
3. Understand and define the freeholder rights and responsibilities
Owning a freehold is not just simply owning a piece of paper and that's that - just like any type of ownership, there are responsibilities attached to the title. Though freehold project managers can take control of these on behalf of freehold owners with their permission, it is still essential that everyone understands what comes with owning the freehold title.
Whether they choose to do this independently or alongside a freehold managing agent, freeholders must be willing to:
- Undertake or oversee maintenance and repairs to a building' structure, including its roof and guttering.
- Ensure the upkeep of maintenance and repairs in communal areas.
- Arrange and schedule any internal or external general maintenance, such as cleaning, decorating, or painting.
- Maintain control of utilities such as heating, plumbing, and electricity.
- Arrange, oversee or undertake any pest control work
- Arrange, oversee and prepare the property or block for major works ensuring that they follow Section 20 of the Landlord and Tenant Act 1985
- Oversee, arrange and communicate with contractors to schedule works and arrange payments
- Ensure that the building complies with health and safety regulations
They must also manage things like buildings insurance, ground rent collection, service charges, management reports and utilities.
4. Estimate costs for the process
There are many factors that determine what price a freehold acquisition will cost. The main elements that freehold project managers take into account are: the size and location of a block or building, the number of flats in a building, the length left on each lease before it expires, and any potential value added after purchasing the land. There are also professional fees to be taken into consideration, and whilst it may be appealing to look at the cheaper end, by instructing higher quality professionals efficiently, large savings can be made. A project manager would be able to help you with this.
As part of the first phase of any freehold project, a professional valuation report will be undertaken to confirm any suspicions regarding valuation. A freehold project manager will then be able to explain to all participating leaseholders how much the process will likely cost to them. This is important, as things such as lease length and flat values can radically change how much the process will cost for individual leaseholders.
5. Begin the legal negotiation proceedings
Perhaps one of the most important services of all that freehold project managers offer is their help with the negotiation proceedings of buying a freehold. In the acquisition process itself, there could be legal processes which the collective group may have to go through.
It is well known by project managers that the negotiation process between the existing landlord and the collective group of leaseholders, is the most unpredictable phase of any freehold project. To secure the tenants position, a good project manager will ensure you are properly prepared, with all of the ammunition needed to inform the negotiations. Without the help, expertise, and network of a freehold managing agent, freehold collective groups would likely immensely struggle with this process and would be highly likely to not get a fair price for their purchase.
Using reports and analysis from the solicitor and a valuation report, project managers can develop a strategy that negotiates both counter notices and tribunals. Their meticulous approach ultimately ensures that leaseholders will be successful in acquiring their Freehold for the fair market price or far less.
6. Prepare the new freeholders for successful ownership
Quite often, after purchasing their freehold, new freeholders find that they don't quite know where to begin with their share of the freehold. There can be things like short leases and investment opportunities to assess, as well as how to find the correct deals on things like buildings insurance and contractor agreements.
This is where The Freehold Collective are unique as a managing agent: they offer a completely bespoke service that aims to support freeholders from the moment they begin the freehold acquisition process and doesn't end even after they have successfully acquired their freehold.
Their ownership stage provides a comprehensive support service to freeholders as they adjust to their new roles as Freehold owners, and provides impartial and invaluable guidance and expertise for when new freeholders come up against initial and every day freehold management challenges.
The process of how to buy a freehold can be daunting, but is made much simpler with the help of professional project managers. Freehold project managers have years of experience in this area and know how best to successfully complete an acquisition for fair market value - so you don't lose out on your money or time spent.
They will work closely with all parties involved in any negotiation proceedings that come up during the purchase process as well as offer support throughout ownership stages by providing impartial guidance, invaluable expertise, and extensive knowledge about how to manage a freehold acquisition effectively.
Mike Somekh, CEO, The Freehold Collective