Right to Manage at Chelsea Bridge Wharf – yes we can! (and we do not need to wait).
Notes from a residents’ meeting on 9th December 2021
On 9th December, at a well-attended online meeting organised by Mike O’Driscoll (Warwick resident) residents met to discuss options for taking back control of Chelsea Bridge Wharf (CBW), especially through the Right to Manage (RTM) process whereby leaseholders can decide which managing agent to appoint, or can run services directly themselves. Currently, the managing agent at CBW is Rendall and Rittner, who are appointed by, and answerable to, the freeholders (e.g. Berkeley Homes), not to the residents.
The meeting’s key speaker was Mr Roger Southam (RICS) who has a wealth of experience in helping developments to achieve RTM. Mr Southam was also key in Chelsea Bridge Wharf’s successful RTM applications in 2011/12. Mr Southam has over 40 years’ experience managing residential, retail, office & public sector real estate assets within the UK & overseas providing development, investment and management services. He has a national profile as a policy advisor and has made many media appearances.
The discussion at the meeting was very lively and although it was planned to last 40 minutes it continued for over 2 hours as many people contributed questions and thoughts in relation to the RTM process.
Mr Southam’s expert advice was clear – a RTM application for whole development of CBW has a high chance of success and waiting several years for legislative change is not necessary or realistic.
MOD added that the CBW residents’ survey clearly shows very low satisfaction with Rendall and Rittner (27% satisfied or very satisfied) and identifies that RTM or other means of replacing Rendall and Rittner was an extremely high priority for residents. This was also reflected in the views of most residents attending the meeting.
Options for replacing a managing agent
Mike O’Driscoll (MOD) started the meeting by explaining some options which exist for changing managing agent or assessing options for a new agent (where RTM has not yet been achieved).
These include approaching the freeholder/s (e.g. Berkeley Homes) with evidence of resident dissatisfaction with the managing agent and/or evidence of poor performance and asking them to consider the retendering of the contract for the managing agent, an approach which has been successful on several developments.
Another option is to approach the first tier tribunal (FTT) and ask them to appoint a new managing agent but this is a ‘long shot’ as the evidential bar to establish mismanagement by the managing agent is very high and even if this was successful the residents do not have control of the managing agent which may be appointed by the FTT.
Right to Manage (RTM) is by far the best option, because, if successful, residents have full control in choosing and directing a managing agent, as well as being able to choose buildings insurance providers and other ‘landlord duties’.
What is Right to Manage?
RTM is the right for the leaseholders of a building containing flats to take over management of the building from the freeholder, via an RTM company (see here for further detail https://www.lease-advice.org/fact-sheet/right-to-manage/ ).
Leaseholders can the choose which managing agent they want to appoint or can managed the block directly through a committee or board of residents. Residents have responsibility for all services except the collection of ground rent.
Mr Roger Southam, who was the lead consultant/advisor in CBW’s original RTM application in 2011/12 gave his assessment of whether RTM would now be possible at CBW.
It was Mr Southam’s view that an RTM application for all blocks at CBW would have a very high chance of success and that there were no obstacles to starting the process in the near future. The RTM process would of course need to be supported by at least 50% of leaseholders in each block where RTM is applied for.
MOD felt that this would not be a problem given that there are very low levels of satisfaction with the current managing agent (Rendall and Rittner), with just 27% very or fairly satisfied and just 8% feeling that the service charge was good value for money and that investigating options for replacing Rendall and Rittner being an extremely high priority in the CBW Residents’ Survey 2021) so there would be an opportunity to identify managing agents who could provide a better service and better value for money.
The RTM process
Mr Southam explained that the main step in the RTM process is obtaining at least 50% support of leaseholders in each block, setting up a company limited by guarantee for each block (with each having at least 2 directors) and an overall company to co-ordinate. Directors work in a voluntary capacity and are not paid (except the reimbursement of reasonable expenses). The RTM application is then made to freeholders (one application per building).
Mr Southam estimated that the process might take 10 months in total but once RTM is granted we could shortlist, interview and then choose our own managing agent. We would be able to replace them at any time, subject to contract but of course we would hope to establish a long and productive relationship with a good managing agent.
MOD has obtained quotes from managing agents for the cost of the RTM process and obviously it would depend on how many blocks were included in the RTM application but a reasonable estimate is £80-£100 per property. A part of the cost might also be met from RA funds. Either way, it would be a small charge per leaseholder (a one off cost which would very likely be recovered through reduction in service charge under a new managing agent).
Waiting in vain
Mr Southam felt that it would not be a good strategy to wait 2 to 3 years for legislative change (which might make the RTM process easier), as it is very unclear when such change might happen and that changes to commonhold/freehold was a very low priority for the government in any case and that the responsible minister, Michael Gove, has a very broad brief and is unlikely to be able to prioritise these reforms. Mr Southam noted that he had been on a working party for leasehold reform 6 years ago and no progress had been made. MOD added that a general election is possible within 18 months so that it is not all clear that any legislation reforming commonhold / leasehold could be brought through in this parliament . Mr Southam’s view on this is also supported by bodies such as Leasehold Knowledge Partnership and the Leasehold Advisory Service.
Previous RTM application at CBW
In the previous RTM applications in 2011/12, the RTM was granted for all blocks apart from those where Fairhold Artemis was the freeholder (Centurion, Eustace, Horace, Howard and Oswald). Fairhold Artemis appealed against RTM on the grounds that not all these buildings were legally separate entities and (as I understand it) eventually the CBW Right to Manage Organisation decided that it would be best to compromise rather than to enter into legal action with Fairhold Artemis, and identified Rendall and Rittner as a good managing agent. Rendall and Rittner were a relatively new company at the time and seemed promising. Residents voted for R&R to be appointed (although as the only other option was Peverel who residents were desperate to get rid of, this was not such a ringing endorsement).
Mr Southam acknowledge that Fairhold Artemis might again appeal against an RTM process but felt that they would not have a strong case especially in light of some recent legal precedents and it is unlikely they would appeal.
If Fairhold Artemis did appeal against RTM for their blocks, then residents would have the option to go to upper tribunal to contest, but another option would be to proceed with RTM for all blocks where Fairhold Artemis is NOT the freeholder and continue to work to obtain RTM for the Fairhold Artemis blocks as soon as possible afterwards.
The option of Warwick building pursuing RTM alone was also discussed and Mr Southam and some residents thought this was certainly viable and might be a good option.MOD pointed out that although Warwick does represent a significant percentage of properties at CBW, it would of course be better to include as many blocks as possible in an RTM process to achieve economies of scale and reducing bureaucracy.
Choosing a new managing agent
Mr Southam recommended that an extensive, rigorous and broad selection and interview process, and having a clear tender document would be essential in choosing a new managing agent and being clear what the priorities for a new managing agent to ensure a good match. Mr Southam described his impressive track record in supporting developments to achieve Right to Manage and in selecting new managing agents.
If you have any queries about RTM, or would like to be invited to future online meetings, please feel free to post here or get in touch with Mike O’Driscoll at email@example.com