management company
📖 What is management company? Meaning and definition
A management company plays a crucial role in the administration of residential properties, especially those with multiple leaseholders. Its primary function, as seen in the cases, involves managing works and services for which leaseholders contribute through service charges. This can include significant undertakings like painting works or repairs due to water damage.
When a management company undertakes works, it is typically subject to statutory consultation requirements, such as those outlined in the Landlord and Tenant Act 1985. Failure to properly comply with these requirements can limit the amount the company is entitled to recover from individual tenants for the costs of such works, often to a maximum of £250, unless dispensation is granted by a tribunal.
The company's responsibilities extend to ensuring that service charges are reasonable and payable. Disputes often arise when leaseholders challenge the reasonableness or payability of these charges. The management company may also be involved in legal proceedings, and tribunals can determine whether the costs of such proceedings can be included in future service charges or as an administration charge.
In some instances, a management company might be owned by a landlord, and its actions, or inactions, can have direct financial implications for leaseholders, such as when repairs fall within an excess included in service charges.
📋 Requirements
- Must comply with statutory consultation requirements for works, unless dispensation is granted.
- Service charges levied must be reasonable and payable.
- Must adhere to determinations made by tribunals regarding service charge disputes.
📝 Procedure
- Undertake necessary works or services for the property.
- Initiate consultation with leaseholders regarding proposed works, if required.
- Issue service charge demands to leaseholders for their contributions.
- If challenged, present evidence to a tribunal regarding the payability and reasonableness of service charges.
- Seek dispensation from consultation requirements from a tribunal if urgent works are needed or consultation was not properly conducted.
💡 Examples
- A management company was found not entitled to recover more than £250 from a tenant for painting works because it failed to properly consult the tenants.
- A tribunal determined that a management company's fees for certain services were reasonable and could be included in the service charges.
- A management company, owned by a landlord, was involved in a dispute where a tenant sought to offset service charges due to water damage caused by other tenants.
- A management company successfully applied to the First-Tier Tribunal for dispensation from consultation requirements for urgent works at a residential property.
📚 Legal basis
- Landlord & Tenant Act 1985
- Tribunals, Courts and Enforcement Act 2007
❓ Frequently asked questions
What happens if a management company doesn't consult leaseholders before doing work?
If a management company fails to properly consult leaseholders as required by law, it may be limited in how much it can recover from each tenant for the cost of the works, often to £250, unless it obtains dispensation from a tribunal.
Can a management company charge for legal proceedings?
A tribunal can determine whether a management company is precluded from including the costs of legal proceedings within future service charges or as an administration charge, meaning it's not always allowed.
What if I think the service charges from the management company are too high?
You can apply to the First-Tier Tribunal Property Chamber (Residential Property) under section 27A of the Landlord and Tenant Act 1985 for a determination as to whether particular service charges are payable and/or reasonable.
Can a management company get around the consultation rules for urgent repairs?
Yes, a management company can apply to a tribunal for dispensation under section 20ZA of the Landlord and Tenant Act 1985, which, if granted, allows them to proceed with works without fully complying with consultation requirements, typically for urgent matters.
Is a management company always a separate entity from the landlord?
Not always. In some cases, as shown in the excerpts, a management company can be owned by the landlord, which can affect how certain responsibilities and liabilities are handled.
What is the role of the First-Tier Tribunal regarding management companies?
The First-Tier Tribunal Property Chamber (Residential Property) makes decisions on disputes between leaseholders and management companies, including determining the reasonableness and payability of service charges and granting dispensation from consultation requirements.