10 Things Channel 4 Dispatches Didn't tell You About Owning A Flat

Here, News on the Block shares with you 10 things Dispatches couldn't fit into their programme.

1. Good managing agents: First, it may be easy to conclude from the Dispatches program that all managing agents are rogues seeking to take advantage of flat owners. But this is too simplistic, and not true. There are many excellent, professional managing agents out there who will look after your building with dedication and care and not seek to trick or overcharge you.

2. Regulation: It may be surprising but residential property management is one of the few areas of the economy where billions of pounds of client money is held in a virtually unregulated environment. Many managing agents belong to the professional body, the Royal Institution of Chartered Surveyors or trade group, the Association of Residential Managing Agents (ARMA).  Some managing agents belong to both.  There is universal support for compulsory independent regulation of the industry, as recently identified in the CentreForum report into leasehold property, but this is something that would most effectively be introduced by Parliament.  So far, Grant Shapps, the Housing Minister, has been reluctant to consider any Parliamentary involvement and this was not one of the areas that he addressed on television. 

3. Appointment of manager: If you believe your flat is mismanaged, and you can prove fault on behalf of the managing agent then you can make an application to the Leasehold Valuation Tribunal to appoint another managing agent to manage the building.

4. Right to Manage: A more popular alternative than Appointment of a Manager is for a group of flat owners to make an application to exercise their Right to Manage the building.  This is a no-fault procedure, so providing the qualification criteria are met there is little reason for the Right to Manage not be granted. The effect of gaining the right to manage means that the flat owners can either manage the building themselves or appoint a managing agent of their choice to manage the building for them.  You can read more about the Right to Manage here.

5. Buying Your Freehold: Another option for flat owners is to purchase the freehold of the building collectively from the incumbent freeholder, otherwise known as ‘enfranchisement’. This is often motivated by unsatisfactory management and a desire for flat owners to be able to determine their own affairs in the building. Also, as the qualification criteria mirror that required for the Right to Manage process, if the cost of the freehold is affordable then leaseholders sometimes to prefer this option.  The consequence of purchasing the freehold is that the flat owners own the building and all the rights that go with that, including that of management. You can read more about enfranchisement here or contact the Association of Leasehold Enfranchisement Practitioners (ALEP) to find a practitioner. 

6. Lease extension: A flat is a diminishing asset. As a flat owner you only own a lease, giving you the right to live in the property for a certain period of time. The flat is owned by the freeholder to the building. The number of years on your lease decreases with each year you own the property. Should the number of years on your lease expire, the flat reverts into the ownership of the freeholder. Flat owners can protect themselves against this and any decrease in value by purchasing a lease extension. This is now an absolute right enshrined in law.  You can read more about lease extensions here or the Association of Leasehold Enfranchisement Practitioners (ALEP) to find a practitioner. 

7. Lease Variation: If the lease you own is poorly drafted or unsatisfactory in some other way, then you also have the option to vary the wording of the lease.  This would require the support of your neighbouring flat owners and usually require an application to the Leasehold Valuation Tribunal (LVT). Sometimes, the wording of the lease can be altered when a lease extension is granted or a the freehold to the building is purchased.  

8. Costs:  Although the Leasehold Valuation Tribunal (LVT) only has a limited power to award costs (up to £500), sometimes legal costs are later recovered from the flat owner(s) under the terms of the lease. Flat owners can make an application to the LVT to prevent a freeholder/managing agent from doing this.

9. Residents association: Flat living is about communal living. So, many of the issues faced in managing a block of flats are shared. Usually, it's easier to deal with these collectively and this is where a residents association can be helpful. For more information read here or contact the Federation of Private Residents Associations (FPRA).

10. Retirement flats:  Finally, if you thought that owning a “regular” flat was problematic, the problems are thought to be exacerbated in the retirement flat sector - particularly with regard to something called exit fees.  These are charges made when the flat is sold and are usually calculated as a percentage of the sale value of the property.  Many retirement flat owners have complained that exit fees are unfair, though apologists defend their existence by claiming they help depress service charges in the building because maintenance costs are effectively recovered from the capital appreciation in the flat when the property is sold.  Exit fees are currently subject to an investigation by the Office of Fair Trading. 

More information about owning a flat can be found in the book, Being a Leaseholder - The Essential Guide to Owning a Flat.