Residential Leasehold Block Management - Guidance and Information

Buildings Insurance

The lease will normally require the freeholder to take out adequate insurance for the building and the common parts. Costs of the premium will usually be recovered through service charges.

Common Parts

These are the parts of the building shared by the occupants. This can include stairwells, lifts, gardens and main entrance doors. Service charges often include the cost of maintaining the common parts of the building.

Ground Rent

Ground rent may be a requirement of the lease, payable on the due date and potentially subject to the issue of a formal demand by the freeholder or his agent.

Freeholder

The freeholder or superior landlord owns the building and leases the individual flats to the leaseholders.

The freeholder is usually responsible for the maintenance and repairs of the building; however costs for maintenance and repair can be recoverable through service charges paid by the leaseholders.

Illegal / Criminal Activity

Allegations of illegal and criminal activity (e.g. fraud) should be referred to the relevant authority (such as the police) or regulators (such as Trading Standards) who are empowered to undertake enforcement action. The Ombudsman does not have regulatory powers and cannot consider allegations of illegal or criminal activity.

Lease

The lease sets out the contractual obligations between the freeholder and the leaseholder. When a property changes hands, the seller (leaseholder) will pass on the rights and responsibilities of the lease to the purchaser.

Leaseholder

The party leasing the property subject to the terms of the lease. Leaseholders should be aware of all conditions set out in the lease.

Letting Agent

The leaseholder may appoint a letting agent to find a suitable tenant. The agent may also manage the property on behalf of the leaseholder, liaising with the property management company when required.

Further information regarding residential lettings can be found on our Residential Lettings Guidance and Information Page

Negligence Claims

Negligence is a term with a legal meaning and only a court can decide if an agent’s actions or inactions were negligent. The Ombudsman cannot decide claims of negligence and cannot speculate on what a court may decide. Consumers should seek legal advice if they wish to pursue a negligence claim.

Resident Management Company

If a group of leaseholders want to change the management of their property, they can do so by using their right to manage. The Commonhold and Leasehold Reform Act 2002 gives the right to leaseholders to transfer of the freeholder’s management functions to a company set up by the leaseholders. This allows leaseholders as a group to decide the management arrangements for the building.

Residential Leasehold Management Agent

Appointed by the freeholder or the resident management company to manage the building.

The agent will charge a fee for day-to-day management which will usually be paid by leaseholders as part of the service charges. Where major works are involved, the agent may charge an additional fee, which may be a percentage of the total cost of such works.

Residents’ Association

Leaseholders may consider forming a Residents’ Association to liaise with the freeholder. Residents’ Associations are also entitled to be consulted on certain matters such as the appointment of managing agents.

Service Charges

Service charges are payments by the leaseholder to the freeholder. Details of what can and cannot be charged by the freeholder and the proportion of the charge to be paid by the individual leaseholder will be explained in the lease.

The freeholder can only recover the costs of services which are reasonable. Leaseholders have the right to challenge service charges they feel are unreasonable at the First-tier Tribunal (Property Chamber).

Reserve Funds

Many leases allow the freeholder to collect sums in advance to create a reserve or ‘sinking’ fund to ensure that sufficient money is available for future works.

Right to Manage

Under the Commonhold and Leasehold Reform Act 2002, leaseholders have the right to choose who manages their building. As long as at least half the leaseholders in the block agree to proceed the freeholder cannot legally obstruct the process.

Tenants of Leaseholders

While the block management agent will act in the best interest of their client – usually the freeholder or the leaseholders – they must treat any tenant of a leaseholder fairly and with courtesy.