Migrating to managing agent from residents’ management Co?

Migrating to managing agent from residents’ management Co?

9:22 AM, 12th April 2023, About 8 months ago 34

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Hello, We are a small block of 7 flats with a mix of owner occupiers and owners who let their flat. Approx 22 years ago we set up a Ltd company and jointly purchased the freehold so that each flat owner has 1 share in the company.

Since purchasing the freehold, I have been an owner occupier and director of the management company, together with 1 other director and a company secretary.

The company secretary has recently put her flat on the market and given notice that she has found a buyer and so is resigning her position.

We have always taken the view that a minimum of three active directors are required on the basis that if at any time there are only two, an unexpected change of circumstance could leave one person responsible for all of the duties of the management company. The other flat owners have never been prepared to, or not been capable of, being actively involved in the management company.

Having discussed the situation with the other remaining director, neither of us is keen to become the last man standing and after 22 years of service, both of us have different reasons to want to free ourselves of what is becoming an onerous obligation.

We have therefore decided to start exploring local companies who provide block management services with a view to outsourcing as much of the obligations as is possible. Clearly, there will be a cost to be borne as other owners will likely have little appreciation of how much money our voluntary efforts have saved them over those years.

We have contacted all owners to explain what we are proposing and why, in an effort to open up a discussion and to take views. Disappointingly so far, after a reasonable wait, nobody has responded at all.

The ideal scenario would be for everyone to really understand and support the proposal, and the worst case would be owners objecting in principle but without offering any useful alternative suggestions.

I’m wondering what action we should take if some, or all, of the 5 non-contributing owners won’t support us but won’t or can’t step up to the plate.

Another consideration is what would happen with regard to the freehold if we, as the last two remaining directors of the management company, both resigned closed down the Ltd company, replacing it instead with an informal Resident’s Management Company?

Thank you,


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11:44 AM, 12th April 2023, About 8 months ago

I feel for you. I was in exactly the same situation as Co. Sec of our share of freehold company of 14 flats. Many of the owners were elderly and unable to step up. There were 3 of us, then the treasurer died, leaving us with an even bigger headache. The increase in regulations placed us under increased pressure, and I decided to sell up. We had no option but to bring in a MA, and called a shareholders meeting to explain the reasons and the potential service charge increase. Some came, some didn't. We would still remain as directors, and could manage the MA and keep costs in check. New directors would be sought as flats changed hands in the future.

Freda Blogs

11:46 AM, 12th April 2023, About 8 months ago

In my experience, apathy reigns in circumstances such as yours - leaseholders can be quick to complain about costs and services but will not step up to assist with the management, which as you say, can be quite onerous.

Just appoint appropriately qualified managing agents (ideally ARMA). It is important that they have the relevant experience in the field of Block Management, and then put your feet up.

There is no need to close down the company and the freehold need not be impacted. There will still need to be some contact and decision making function between the agents and the company, but the agents should do the 'heavy lifting' and compliance etc for you.


12:29 PM, 12th April 2023, About 8 months ago

As above, we had a very unpleasent person move into the block and no longer wanted the hassle and abuse. It costs a bit more but the block management company does everything. Worth every penny.


12:57 PM, 12th April 2023, About 8 months ago

The function of the limited company is to enforce the lease covenants obligations as landlord /lessor are performed and lease covenants are performed by the tenants/lessees. Flat owners wear two hats
1. As shareholders with voting rights under Articles and Directors owe fiduciary to the company as a separate legal entity/personality under Companies Act and
2. As lessees with obligations under their Leases.
Shareholders vote on contract with a MA and as lessees right to be consulted under Section 20 Landlord &tenant act 1985.
It depends what you want to hive off and what to keep in house. It will depend how much the service will cost and added to service charge and response from flat owners to extra charge


15:41 PM, 12th April 2023, About 8 months ago

Thanks. I appreciate every response and the benefit of your similar experiences. I'm still left wondering though, with regard to the Ltd company, what would happen if, after appointing a managing agent, we both chose to resign our Director roles, for example if we both wished to dispose of our flats, or simply no longer wished to be actively involved.

Graham Bowcock

16:43 PM, 12th April 2023, About 8 months ago

Reply to the comment left by RichM at 12/04/2023 - 15:41
The limited company will stay in existence as the freeholder of the property.

The question of directors is not getting any easier as they have full commercial liabilities, but are usually lay people in this scenario. The ideal situation wpoiul;d be for every flat owner to be a director, but unless the Articles of Association require it, you cannot insist on it.

A good managing agent should, however, be there to help the directors so they need to be chosen wisely.

My firm has just resigned from a block management where the sole director wanted to resign and no replacements were imminent. Addded to some issues with the property we felt it best to get out.

Freda Blogs

17:07 PM, 12th April 2023, About 8 months ago

You could sell the freehold and remain as leaseholders only, but you would no longer retain the control over cost and services that you have currently. Perhaps the suggestion would encourage some of the other leaseholders to step up?


13:15 PM, 13th April 2023, About 8 months ago

Reply to the comment left by Graham Bowcock at 12/04/2023 - 16:43
As an inducement to participate as an 'active' director, can the freehold company pay 'expenses' to the director(s)?

Graham Bowcock

13:20 PM, 13th April 2023, About 8 months ago

Using the word "expenses" correctly (i.e. not as an MP), then the directors should not be out of pocket.

Taking the broader sense, then there's no reason why a director cannot receive some form of payment, maybe an honorarium, to reflect time spent for the general good. I have been involved with charities where, for example, the secretary received such a payment. The only thing is to be transparent about it.


13:32 PM, 13th April 2023, About 8 months ago

Reply to the comment left by Graham Bowcock at 13/04/2023 - 13:20We never asked for, or expected payment for running our share of freehold company, but it did take a lot of our free time. Fine, if you're retired [I wasn't at the time], but hard to balance if you have a demanding job. The Managing Agent we appointed charged a management fee, which we signed off. Maybe, we should have also charged a management fee for our work. This will become more of an issue if/when Commonhold takes off.

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