Does Right to manage relate to retirement flats?

SHARE POST

The retirement sector is difficult and very different to leaseholders. If you have any further concerns after reading this then don’t hesitate to contact Age UK advice. Which is a free confidential national phone service for older people for their friends, family and carers and organizations that act on their behalf. Most of the flats in a retirement scheme are sold on long leases. There are implications for the leaseholder when having a leasehold flat. It is well known that older people have a tendency to downsize and to move from a larger house into a flat. Often of an assisted basis i.e. where somebody is on site to assist them if they need help. This is a very different form of ownership from owning your own house and does need some form of change. A house is usually freehold and the owner has full ownership as well as control of the building and handles all repairs. It is very different when a flat is in a block.

In real terms they have a long tenancy and a right to occupy the flat for a set number of years anywhere between 99 and 125 subject to a payment of a ground rent. The lease is in effect a contract between the individual flat owner and the landlord and sets out the rights and obligations of each party. It is the landlord’s normal responsibility to deal with all repairs and the upkeep of the building and provide services such as lighting, cleaning, gardening etc but could also include a warden. The leaseholder then undertakes to reimburse the landlord through the payment of service charges for looking after the property. The leaseholder is reliant upon the landlord dealing with the building and all support services. They cannot do it themselves.

What is retirement housing?

Retirement housing is often for housing occupied by people normally over the age of 55 or 60 and this is set out in the lease. This may be by way of a scheme where the block of flats/cottage or bungalows and sometimes both are often referred as a mixed scheme. They normally have some form of warden or visiting scheme manager as well as an alarm call system.

Alarm call systems

This is a system which is there to provide security for older people especially if they have a fall or something. They are not always 24 hours but often are a call system to get somebody especially if there is an emergency. They have some form of pull cord at the property and some schemes also have cords in community areas. It could be a warden on site or if it it out of hours an emergency telephone number.

There are also wardens sometimes on site or scheme managers. Every scheme will be different and it is important that you understand what they do and do not supply. You also need to be aware that the administration costs/service charges could well be large.

If you are buying a private retirement housing you need to be aware that there is always a cost to these type of schemes. The lease would set out the services that you are entitled to and explain how the landlord or managing agent will recover the costs through a service charge. It is so important that you are aware of these such costs as they can be large. Most leaseholders will often be satisfied with the management of their retirement development. But problems can occur and it is important that you are aware of what your responsibilities are.

Problems are often as follows:-

a) Increasing costs through management fees and service charges each year – often these are increased on a year to year basis not just way of inflation

b) A reduction of a service or a decrease of hours of the resident management service

c) A lack of opportunity for residents to influence the management type scheme i.e. the landlord does what he wishes

d) The diminishing value of your flat. Each year you hold a flat the term comes down and there are specific periods that you may have to increase your lease i.e. do a lease extension

If problems occur your first recourse would be to speak to the manager or landlord or through a Residents Association. You will find with most buildings that there is a Residents association and you should be able to get some form of action dealt with through this. This does not mean that you cannot proceed under the Landlord and Tenant Act if it became more drastic.

Individual or Joint action

You may decide that you have given the managers of the building enough opportunities to try to resolve your difficulties. It is generally accepted that management problems on a Retirement Housing Scheme can be dealt with through a Residents Association. This is some form of Association which has been granted recognition by the landlord which requires at least more than half of the properties to be represented. Each lease may set out its own residents association and/or if there is no recognition forthcoming then you can apply to a rent assessment panel for an external recognition. This requires at least 60% of the properties to be represented. There are several legislative remedies for the leaseholder there are greater working rights collectively rather than doing individually.

Using landlord and/or manager’s complaints procedure

You may wish to ask for a complaints procedure. All managers/landlords have to have such a document and it would form part of the leaseholder’s handbook. It should state the procedure to the leaseholder. If you want to make a complaint and any further steps if the complaint is not resolved at the first stage. There are often a set number of stages for a complaint procedure. The manager should give the complainant an opportunity to deal with a dispute through a meeting or mediation. There is also an independent housing ombudsman that may also be able to help.

What is ARHM

There is a retirement scheme known as the Association for Retirement Housing Managers and it is noted that most of the providers in this sector will be part of the scheme.

The Association produces its own set of code of practice which is normally approved by the Government. Managers who are part of this scheme have to deal with certain legal rights according to their code of practice.

There are various types of the code of practice and you can ask for a copy of this through the Association. But examples to have rights of receipts and invoice supporting annual accounts, deal with the annual meeting to consult on any changes to any services, comprehensive leaseholders handbook and the right to a set response time for dealing with correspondence and organizing repairs for the leaseholders.

If your manager is part of the ARHM rules then lessees are also given more remedies. All ARHM members must have procedures to allow lessees to make complaints and access to the redress via the senior level. They must offer lessees the right to use an ombudsman and they can ask for investigation of alleged breaches of code of practice take place.

Referral to the independent housing ombudsman

Where the landlord is a housing association, the leaseholders have automatic access to the ombudsman. Some private landlords are also members of these schemes and they will be able to tell you to. The ombudsman will not usually deal with complaints. Unless you first complete the complaints procedure of the landlord or manager.

Every ombudsman has a duty to investigate all complaints made to him and many courses of action are available. They will thoroughly examine all the matters that you have referred to them by way of complaint. They can sometimes even deal with a formal enquiry that may include a person that is complaining. The ombudsman will then write to both the complainant and the landlord setting out his results. In the event it is not accepted it can be sent to arbitration.

Do I still have statutory rights and remedies?

You will have substantial rights under legislation to challenge service charge and other management arrangements. You have the right to take over the management themselves or to acquire the freehold of the building. You should see our procedure on right to manage and/or enfranchisement.

We would suggest in these instance that you should look to employ a solicitor in this regard.

Service charges

In respect of the same as most leases you are entitled to know how service charges are made up and to see accounts on what they are based on. You will be entitled every year to a summary of all the service charges for the income and expenditure within a minimum of six months at the end of the accounting year. The summary must contain details of all the costs incurred by the landlord in provision of services and show how they are or will be charged by the leaseholders. The summary must show details of payments made by leaseholders already and those still outstanding, what has actually been paid by the landlord and what monies remain in the service charge account.

If you were still unhappy with the summary then you could refer to this by way of the residents association or a direct complaint. It is a legal requirement that under Section 42 of the Landlord and Tenant Act 1987 requires the landlord to hold service charge monies in a Trust account.

It is important that you are aware that many leases on retirement properties do contain various clauses on a deferred service charge basis on the sale of a property. This is a charge intended to fund future works to the building on a sinking and reserve fund and is accumulated through receipts from sale proceeds. Traditionally such funds were used to pay for items of major expenditure such as a roof or lift improvements and to lessen the impact of paying in one year. The amount set out will be based within the lease but it can be from 1% upwards and you should refer to your solicitor on this.

Do we still have rights on consultation of service charges?

The law requires that all leaseholders must be consulted before any major works are carried out. Where the landlord proposes to carry out works for repair or maintenance which will cost the individual leaseholder more than £250.00 or enter into a long term contract which will cost the leaseholder more than £100.00 a year. He must before proceedings inform and consult all those expected to contribute towards the cost. This has the joint effect of giving notice of intention to the leaseholders and seeking their views on proposal.

In the event that the landlord fails to consult then he is not able to recover his costs beyond the statutory limit. He can ask for dispensation through the property tribunal but this is only in special circumstances.

Rights to challenge the service charge, do I still have these?

The legislation provides that protection of leaseholders in demands as they must be reasonable. There is a tribunal that you can refer to that will hear evidence presented and will make a determination on whether services charges are reasonable or not. It is important that you take advice on this from a solicitor.

Insurance

Where the service charge includes a contribution towards insurance. You can ask from your landlord for a written summary and a copy of the insurance cover including the name of the insurer.

Did you know that you are now entitled to ask for what commission the landlord or managing agent receives by way of the insurance?

You will often find that large commissions are paid and you could be paying over the odds for your insurance. Don’t hesitate to contact us for a quote as we do not pay managing agents’ commissions on any of our policies and you may be able to substantially reduce your payments.

SHARE POST