RSL Leaseholders & Management Issues

RSL Leaseholders & Management IssuesLeaseholder Network Meeting24 September 2015

Richard McQuillan Head of Housing ServicesHafod Housing Association

Background

RSLs develop ‘affordable housing’ via Section 106 agreements.Affordable housing can be social rented or low cost home ownership.Many RSL properties are located on sites owned and managed by another organisation.RSLs are often the leaseholders on these sites.

Prepare in Advance

RSLs should be clear about their responsibilities as a leaseholder.Map out areas of responsibility i.e. properties, communal corridors, car parks etc.Clarify the charges to be incurred; ground rent, site services, utilities & management fees etc.

Be Clear on Charges

Ensure all site related charges provided in advance:Ground rentService chargesUtilitiesManagement fees Other charges etc.Be clear on the frequency of charges.Clarify how the charges are calculated.Understand how the charges are calculated.

Passing on Charges

Ensure Tenancy Agreements / Leasehold Agreements allow for charges to be passed on to tenants / leaseholders & freeholders with a covenant.Provide advance notification to tenants / leaseholders & freeholders with a covenant of the likely costs to be incurred, frequency and method of payment.

Monitoring Site Related Charges

Monitor invoices received.Look at the reasonableness charges for:Utilities costsLandscapingCleaningManagement feesEnsure charges relate to the RSLs’ areas of responsibilities and leasehold obligations.

Value for Money

As an RSL we are responsible for ensuring Value for Money is achieved for our tenants / leaseholders.Check the following:Management fees Vs Site costsAmount charged for utility costsSite services are actually carried outQuality of services & work provided

Examples of Problems

Problems Hafod has experienced include:Section 20 notices not served.Consultation on Qualifying Long Term Agreements (supply of fuel over 5 years) not carried out.Gaps in billing periods.A lack of control over service charge costs.Invoices for services not provided.

Problems (continued)

Poor quality of site servicesLowest price not sought for utility companiesInappropriate use of VAT on fuel chargesA Management Company (on behalf of the Freeholder) refusing to supply a summary of charges in the correct format.

Problems (continued)

Surpluses have not been passed on the leaseholders (the RSL).£5,000 Management fee charge for £11,000 cost of services delivered (45% management fee!!!). A lack of audited accounts to verify the accuracy of the charges.

Problems (continued)

Lack of consistency from the Management Company’s Head Office Vs the Company’s Property Manager‘Other fees’ charged to the leaseholders (the RSL):‘Written Back’ ‘Refer to Drawer’‘Balancing’‘Recharged’‘Allocation’

Summary of Suggestions

Prepare in Advance.Be Clear on Charges.Passing on Charges.Monitor Charges.Challenge Mistakes.

Has anyone else experienced these issues?

Any Questions?