2012 Q1 Conveyancing Periodical - Woe is Me - I am a Flat Owner!

January 2012

By Paul Butt

Download a printable version of this newsletter

If you travel through - or fly over - a country on the mainland of Europe, it is easy to see that the most common form of home for the average resident is an apartment. In the UK, however, the most common home is a house - even if it is a simple two-up- two down terrace. According to the Housing & Planning Statistics 2010 published by the Department for Communities and Local Government, only 18% of the housing stock is comprised of flats[1]. But there are big regional differences - in London, 47% of dwellings are flats. And the percentage of flats is increasing. Since 2003[2], most new-build dwellings in England have been flats. Various reasons can be given for this change. The main one is, perhaps, cost. Many young people were priced out of the housing market by the property boom of the early 2000's. Between 1985 and 2005, the average UK house price compared to average wage, increased from 3.4 to 6.1 times[3] average salary. Flats became all that first time buyers could afford. And the same period saw an increase of buy to let investors, keen to cash in on a booming property market.

The housing market may have been in decline since the credit crunch, but flats remain all that most first timers can afford.  A relative of mine became a flat owner in August last year. That is when their problems started. The flat is a two bedroomed purpose built flat in a northern city, completed about four years earlier. The freehold is owned by a property company and a ground rent (at present) of £200 per year is payable - and there are 64 flats in the development. The management is in the hands of managing agents. In the slightly less than six months they had lived there, the following problems have been encountered:

  • the electric gates have failed on five separate occasions; (at the time of writing they have been locked open for over a month) - so much for security;
  • the lift has failed a similar number of times; (many of the flat occupants are elderly);
  • the entry phone system at the front door of the block is more reliable - it has only failed on three occasions so far;
  • last month a strong smell of drains permeated the block; eventually a blocked drain under the car park was diagnosed;
  • my relative has a top floor flat; just before Christmas the ominous signs of water penetration became noticeable on the wall and ceiling of the bedroom; this remains unresolved at the time of writing;
  • the flat windows are dirty and unwashed; they are allegedly cleaned monthly;
  • weeds are forcing their way through the asphalt of the car park;
  • the flower beds are unweeded.

The list is not exhaustive. Reporting a matter to the managing agents is not easy. There is a premium rate number and you are placed on hold for a seemingly interminable period. Different departments seem to deal with different types of problem, which I suppose is fair enough, if they answered promptly. But despite reports being made - and chased up - work is not done at all, or done badly (like the entrance gates) so the problem reoccurs almost immediately afterwards. But, of course, the managing agents expect the service charge (£1700 plus per year) to be paid on time.

So, of course they turn to me, someone who allegedly knows about such things, and I get asked "What can we do about this?" (Note the 'we'!). And 'me', as if to a client, can easily discourse on the large number of measures enacted for the protection of flat owners in recent years. Indeed, in theory, the law provides great protection for flat owners in such situations. The service charge must be of a reasonable amount and the services provided to a reasonable standard[4]. If a landlord intends to enter into a long-term contract with regard to the services which would cost more than £100 per year per tenant, or intends to carry out major works which will result in a cost of £250 per tenant, then an extensive period of consultation[5] with the flat owners must take place before the contracts are entered into. And of course, if things are really bad, the flat owners can exercise their 'Right to Manage' and take over the management of the block themselves[6].

But none of these will actually get the phones answered and the work done within a reasonable period. Such issues might, after the event, give rise to a claim that the services were not to a reasonable standard and thus form the basis for a claim for a reduction in the amount of the service charge. Such a claim might then encourage the managing agents to do better in the future but then again it might not.

What might have an effect would be the flat owners clubbing together and bringing such a claim jointly. Some blocks of flats have active residents' associations (often formed because of such problems), and such united action is the best way forward.

Understandably, flat owners are reluctant to refuse to pay the service charge.  When they bought, their solicitors will have warned them about the dangers of losing their homes if they did not comply with their obligations under the lease. But the law also provides protection here. A landlord (and it is only the landlord who can forfeit, not the managing agents) can only bring forfeiture proceedings if the flat owner has admitted the breach of covenant or if the fact that there is a breach has been determined by a court or the Lands Chamber of the Tribunal Service[7]. So it is the landlord who would have to bring proceedings, not the flat owners, and in such proceedings the claim of poor service provision could then be determined.

So, I advised, if there is no residents' association, then set about forming one. But such things don't set themselves up. Someone has to be so concerned about the issue and to have the time and abilities to canvas the other flat owners and arrange a meeting and then set up and run such an association - with all the problems of trying to get payment of subscriptions and general apathy. Everybody wants someone else to do something; they do not have the time. The problem with many blocks of flats, though, is that a lot of the owners are buy-to-let investors.  They don't live on the premises and, not living there, they are unconcerned  about the quality of the services on a day-to-day basis. In such a case it can be even more difficult to set up a residents' association or exercise the right to manage.

And the same problems occur with exercising the right to manage. Oh, yes, a great idea - until it comes to contributing to the legal expenses in setting up a Right to Manage company, or wanting to be involved in the running of the company. Neither the company nor the block of flats will run itself - who will be responsible for the day-to-day managing of the block? Does anyone have the ability or the time to do this? (The same problem can arise where the management of the block was placed in the hands of a tenants' management company from the outset.) Many tenants' management companies run very well - until the person doing all the work falls ill or moves on.

To my mind, the obvious answer to this, whether with a Right to Manage company or an ordinary tenants' management company, is for the company to appoint managing agents, rather than run the block itself. Service standards can be agreed with the agents on appointment and the fact that the flat owners are employing the agents might encourage the agents to provide a better service, for fear of being replaced. But some flat owners will vote against using managing agents due to the cost. And some of the worst maintained blocks of flats are those with tenants' management companies trying to run the block themselves.

Managing flats is a skilled business, so, as in all things, always best to use the experts rather than trying to do it yourself.

Paul Butt LL.B is a Solicitor and a Consultant with Rowlinsons Solicitors, Frodsham

[1] http://www.communities.gov.uk/documents/statistics/pdf/1785484.pdf

[2] NHBC new house building statistics http://www.nhbc.co.uk/NewsandComment/UKnewhouse-buildingstatistics/

[3] Source HBOS and Council of Mortgage Lenders; reported at http://news.bbc.co.uk/1/shared/spl/hi/guides/456900/456991/html/nn2page1.stm

[4] S 19 Landlord & Tenant Act 1985 (as amended)

[5] See the Service Charges (Consultation Requirements) (England) Regulations 2003, SI 2003/1987

[6] Under s71 Commonhold & Leasehold Reform Act 2002

[7] S167 Commonhold & Leasehold Reform Act 2002

What now

If you would like to contact us you can do so via telephone, email and fax:

These articles can only be a very brief commentary and should not be relied on as legal advice. No liability is accepted for such reliance.