The appointment of a Manager
(Section 24 Landlord and Tenant Act 1987)
Where the leaseholders of a property consider the management by the Landlord is unsatisfactory, and the leaseholders are unable to exercise the Right To Manage and there is no other remedy available to the leaseholders which is likely to achieve any improvement, they may apply to the First Tier Tribunal (‘FTT’ – formerly Leasehold Valuation Tribunal ‘LVT’) for the appointment of a Manager.
Where the Right To Manage under the Commonhold and Leasehold Reform Act 2002 has already been exercised but the management is unsatisfactory, application may also be made for appointment of a Manager, effectively terminating the Right To Manage.
Provided the First Tier Tribunal (FTT) is satisfied that the case warrants such action, it may make an order to displace the Landlord””s control and management arrangements with a Manager named by the FTT. This manager need not be a managing agent, but could be a leaseholder or other responsible person. The Manager could delegate tasks to a managing agent, but ultimate responsibility remains with the Manager appointed by the FTT.
An application must cover the whole, or part of, a building containing two or more flats. The application may be made by any one leaseholder or by a group of leaseholders acting together.
However, the right to seek the appointment of a Manager from the FTT is not available where the landlord is a local authority, an urban development corporation, a registered housing association, a fully mutual housing association or a charitable housing trust. It is also not available where the landlord is resident on the premises and it is a converted (not purpose-built) property and less than half the flats are let on long leases.
The FTT will make the Order if it is “just and convenient” in all the circumstances and at least one of the following applies:
- any relevant person is in breach of an obligation to the tenant, under the terms of the lease, in relation to the management of the building;
- unreasonable service charges have been, are proposed or are likely to be made, or unreasonable variable administration charges have been made, are proposed or are likely to be made.
- It is not necessary for the service charges or administration charges to have been determined as unreasonable through separate 1985 or 2002 Act applications, (although such a determination would provide useful evidence).
- the landlord has failed to comply with any relevant provision of an approved code of management practice.
- The reference to approved codes of practice relates to approvals under Section 87 of the Leasehold Reform, Housing and Urban Development Act 1993. Two codes of practice have been approved, one produced by the Association of Retirement Housing Managers relating, primarily, to purpose-built retirement housing, and one by the Royal Institution of Chartered Surveyors which is relevant to all residential leasehold property where service charges are paid. (Copies of the codes are available direct from each body.)
- other circumstances where it is just and convenient.
The right to seek the appointment of a Manager applies equally where the lease includes a third-party manager; such as a managing agent for a residents”” management company. In this case all notices must also be served on the manager under the lease.
The Nominated Manager
The leaseholder who submits the application is required to nominate the person of their choice to be appointed as Manager, although the appointment will be entirely within the discretion of the FTT. This may be a professional manager but could be a management company formed by the leaseholders. If an appointment is made, that person or company will manage the premises in accordance with the Order of the FTT.
The form and regulations require the qualifications of the nominated manager to be stated. This should not be taken to mean that the nominee must be qualified property manager (but it often is appropriate). If the nominated manager has qualifications they should be stated, but the absence of qualifications is not necessarily an obstacle to appointment, although each case will depend on its own circumstances.
The LVT Order
The applicant is required to nominate the person of their choice to be appointed as Manager. The FTT will decide whether the nominee is suitable and if an appointment is made, that person or company will manage the property in accordance with the FTT Order.
The FTT has wide discretion in the making of the Order, the matters to be included and the conditions to be imposed. The Order may make specific directions in certain matters or provide procedures for subsequent applications by the new manager to seek directions.
The Order may include provision:
- for the appointment to be temporary or without a time limit;
- for the manager”s costs and fees to be paid by the landlord, the tenants, by any relevant person, or a combination of these parties;
- for the manager to be entitled to pursue claims relating to actions prior to his appointment;
- for the manager to assume rights and liabilities relating to contracts even though he is not party to them.
In effect, the Order will provide the Manager with the level of authority that the FTT considers appropriate to enable him take control of the management of the building. The Manager is responsible to the FTT and is not required to seek or accept instructions from the Landlord or from the leaseholders.
Once the new Manager is appointed, the Landlord ceases to have management control over the building to the extent set out in the Order. The FTT can require the Landlord to provide all necessary documentation, accounts and other information to the new Manager as is necessary for the management of the building.
Variation of the Order
The FTT may, on the application of any interested party (including the Landlord or the leaseholders, and including those leaseholders who were not party to the original application) vary or discharge an Order of Appointment. If the Order is discharged, the management will revert to the Landlord. In varying or discharging an Order, the FTT will need to be satisfied that by doing so it will not lead to a recurrence of the circumstances that led to the original Order, and that it is just and convenient in all the circumstances to do so.