The Residents’ Association (RA) was unsuccessful in buying the freehold in the early 1980s and had continuing problems over repairs not carried out, delays in repairs, overcharging and the like. In the mid-80s major refurbishment of the external and internal parts was put in hand but not fully completed as the builder went bankrupt towards the end of the work. A number of lessees refused to pay the additional costs involved and after some legal haggling were successful in obtaining a reduction in their service charges. When similar work was scheduled for 1990 the RA was determined that this would not happen again.

The RA put forward its own contractor and appointed its own surveyor to oversee the work as well as reviewing the original specification. As a result our contractor was appointed and our surveyor was able to prune the spec. to a more realistic level. About half way through when the lessees had paid the first of the two instalments, a cheque was bounced by the landlord’s bank. Although the RA had been assured that its service charges were held in trust accounts, as required by the 1987 Landlord & Tenant Act, this proved not to be the case and, although there was £90,000+ in ’our’ account, the freehold company owed so much elsewhere that the bank finally pulled the plug. The repair work ground to a halt.

After some feverish negotiations, the RA arranged with the contractors that if they would complete the work the RA would collect the remaining major works money and pay them direct. The contractors agreed to obtain arrears from the freehold company.

After all these alarms, when the landlord offered to sell the freehold for £29,000 no one needed persuading that we should obtain control over our homes. While the legal procedures were still incomplete the landlord went into liquidation. At the time we felt it could not happen to a nicer guy but the bank acting for the creditors found a property company who was prepared to pay £50, 000. We all gritted our teeth and paid the extra and no lessee has ever regretted it.

25 of the 29 lessees took part in the purchase and nine lessees covered the shortfall. All lessees taking part in the purchase were given 999 year leases at a peppercorn rent. Those not taking part continued paying ground rents and also a quarterly management fee. When their freehold shares were eventually bought, the four lessees paid the original cost, plus bank interest for the intervening period plus 10% of that interest. All this extra money was passed to the nine lessees who funded the shortfall. The RMC achieved 100% participation within about two years.

To self-manage or not to self-manage?

Initially, the appointment of Managing Agents was considered. But, the RA felt that actually running the block would probably not take so much more time than that spent trying to get the landlord’s agents to carry out their duties to a satisfactory standard. Not so. Running the block is time consuming but probably the worst aspect is dealing with difficult/uninterested fellow lessees.

There is an executive committee consisting of four directors and the company secretary. They make most of the decisions but keep lessees fully informed about all major items of concern in running the block. Inevitably, most work falls on one or two shoulders and having a Chairman who has retired from full-time employment is a great help. Membership of the Federation of Private Residents Associations (FPRA) is also a great benefit in providing support on legal and management issues.

Collecting the service charges is an area that worries many would-be RMCs, but it has provided few problems. One lessee (a solicitor) was taken to court and he paid the day before the hearing. In some 13 years, it has only been necessary to issue a solicitor’s letter on about 3 other occasions. Owing money to an anonymous firm of agents is one thing, having your neighbours know you are in arrear is another. Although the lease allows for a sinking fund, the RMC decided against having one. This avoids being responsible for sizeable amounts of other people’s money and criticised for choosing the ’wrong’ account. Also the penal tax rates on interest arising on such money makes it an unattractive option.

The RMC has a rolling programme of works whereby either the front or the rear of the block is repaired/redecorated every three years. Specifications are drawn up the previous year and the contractor and the price agreed so every lessee knows his share of the ultimate cost which will be collected in two instalments the following year. As the block is over 100 years old, other major expenditure can arise at any time and lessees are advised to always keep funds available should an emergency occur. So far (in 13 years) this system has worked well but if there were real problems in obtaining payment then the RMC would have to review the current arrangements.

The RMC has drawn up a set of Notes for Lessees which is issued to all new lessees and updated from time to time to time. It details the management structure and the ‘house rules’. Noise and leaving out rubbish at the wrong times are the two most common cause of complaint and there is an abbreviated ‘set’ for use by those lessees who sublet (an increasing number) for issue to their tenants.

When buying the freehold and deciding on self-management, the lessees were told that there was no guarantee that service charges would be reduced but that the RMC could guarantee that all money would be used for the benefit of the block. In the intervening years, a considerable amount of remedial work was necessary and has been carried out bit by bit. Increasingly, protective legislation has added to the considerable administrative burden, but FPRA’s Newsletter is an invaluable tool in keeping abreast of management responsibility.

Quite apart from the increase in the length of every lease (and at the time of the purchase, only about 72 years remained) buying the freehold was one of the best decisions the RA made. The RMC is responsible for a block in a good state of repair where most residents seem content with their home and make an effort to get on with their neighbours. Indeed, the RMC takes it as something of a compliment that another block in the area, contemplating applying for the right to manage, asked if our Managing Agents would be interested in taking on their property as well.

FPRA can be contacted on 0871 200 3324 or www.fpra.org.uk.

Their information pack on setting up a Residents Association costs £15 including P & P, and membership costs from £45 per year for Associations of up to 25 flats with a scale of fees for larger blocks. It costs £25 to join. Four Newsletters a year are issued to members. You can write to FPRA at 59 Mile End Road, Colchester CO4 5BU.