Leasehold Enfranchisement - Edward House: 7 years on
Mick Barry | 11/06/2008
Mick Barry acted on behalf of Edward House on their enfranchisement seven years ago. Since then we have provided advice and counsel on the terms of their lease extensions and general support to the residents association.
The Chairman of the residents association, Gerald Burkeman, tells us what has happened since…
THE FREEHOLD STORY
1. History:
I moved to Edward House in 1991. I became Chairman of a Residents’ Association in the same year and then Chairman of the Company when we obtained the Freehold. Were I to be asked what I considered was the most important thing I have done since I took office, I would have no doubt at all: it was to obtain the Freehold for the Lessees.
There should be no misunderstanding: apart from the co-operation of all the Lessees, we had the best possible advisers in our Solicitors and Surveyors whose joint efforts were unbeatable.
2. Life as Leaseholders
In 1991 the Freeholder of Edward House resided off-shore and the block was (and still is) managed by a well-known firm of Managing Agents, whose allegiance was, of course, to the Freeholder who paid them and it was sufficient that all monies due were collected and remitted. If there was a shortage’ the Lessees were bound in law to close the gap on demand from the Agents.
In short, the Lessees of 28 flats had minimum power and maximum financial responsibility and this frequently led to conflict between the Agents and ourselves. My strong belief was that that position was inequitable and should not be allowed to continue if there was any way of altering it. There was, and it was well worth the effort but it required patience and tenacity as well as the essential professional advice I have already referred to.
We were taken right to the wire and to a Tribunal hearing. The Freeholders fought us all the way, repeatedly upping the asking figure, demanding to put an eighth floor on the roof and retaining rights over the car-parking areas. Our advisers dealt with each of these subterfuges as they arose and it took two years before we were finally successful.
3. The importance of the Freehold
This lies in the difference between the Managing Agents deciding how we spend our money and the Lessees doing their own housekeeping and being responsible for spending it.
But there is another crucial difference: Once we had the Freehold, our roles reversed. We, the Shareholders of Edward House (Hove) Limited, became the employers of the Managing Agents and were beholden to us. They could not spend our money, embark on any major project or make any changes without permission of the Board of Directors of the Company, of which I am still Chairman.
This is important because a prudent Board will be careful housekeepers and will continually plan ahead to ensure that the funds for any major project are available before starting on it. Before June 2001, when we obtained the Freehold, demands for extra funds frequently appeared on the Agent’s half-yearly fee note. For the last 5 years no demands for extra funds have been made though we have undertaken major works.
4. What about the Managing Agents?
If the Lessees in a block are capable of running a business - and running a residential bloc is a business - then perhaps a firm of Managing Agents isn’t necessary. Edward House is not such a block and we do have a firm who have appointed a qualified Property Manager to deal with everything relating to its proper running .
It is fair to say that a Managing Agent firm will never be the flavour of the month! A complaint will frequently lead to demands for a change. But caveat emptor - a change may be a case of out of the frying pan and into the fire and it is often better to try to resolve the problem.
5. Is it as easy as the foregoing makes it appear?
No, it isn’t and it is fair to explain why:
a. Edward House is a block of only 28 flats. It is small enough for me, as Chairman and prime mover, to visit all Lessees to persuade them of the merits of buying. I obtained 100% acceptance, which, I understand is unusual. It meant that I didn’t have to bother with a non-participating Lessees who would have to be billed separately and differently but we would have gone ahead with the purchase provided we obtained the legal minimum percentage of acceptances.
b. I have been able Chair a Board of Lessees who have always worked hands-on, but in due time, that almost certainly will change and if there isn’t in-house direction, management will revert to the Managing Agents and the particular Property Manager. There is nothing I can do about that.
To find out more please complete the online enquiry form, telephone Dan Ongley on 01273 384015 or e-mail d.ongley@gsfwsolicitors.co.uk
The information and options contained in this article are only intended as a general view of the subject concerned. Specific advice concerning individual situations should always be obtained from the usual contact at Griffith Smith Farrington Webb LLP. No part of the publication may be produced without the express written permission of the individual author.
