Does the FTT have the power to appoint a manager to an estate with a mix of freehold and leasehold properties?
Jonathan Watts, Operations Director at Brady Solicitors explains how a scenario could arise that gives an FTT-appointed manager the right to collect the estate rent charges.
It is increasingly common to see new residential estates and developments built with a blend of leasehold apartments and freehold houses.
The leasehold element is pretty straightforward from an estate management perspective. The leasehold owners understand their service charge obligations and the need to contribute to the upkeep of the communal areas.
Likewise, the freehold owners will have bought their property on the understanding that there will be some estate rent charges due for work such as cutting the grass.
How the estate managers deal with the ‘bits in the middle’ though can cause problems though, as highlighted in the case of Cawsand Fort Management Company Ltd –v- Mrs EM Stafford & Ors.
In the Cawsand case, the leaseholders had exercised their power under s.24 of the Landlord & Tenant Act to apply to the First-tier Tribunal to appoint a manager.
In appointment of manager applications, the FTT can appoint a manager to act in relation to the premises and “to carry out such functions in connection with the management of the premises as the tribunal thinks fit.”
The FTT appointed a manager on a three year term to manage amenity land (amongst other things) at the premises belonging to the freeholder and over which the leaseholders had rights of access and use.
S.24 gives the FTT the power to appoint a manager to “manage the whole of the premises or such parts of it as are relevant and not just the building or part which contains the flats as long as the leaseholders enjoy some right in respect of the other part(s) of the premises, excluding the building or part which contains their flats.”
So held the Court of Appeal in the case of Cawsand case.
So what, you might say.
Well, imagine you are faced with a mixed site of leasehold and freehold properties with a private sewage plant serving all residences, with the leases and transfers obliging the flat and house owners to contribute to the maintenance of it by their respective service or estate charges.
Furthermore the landlord is failing to adequately maintain the sewage plant.
The FTT could, with reference to the Cawsand case, appoint a manager to “carry out such functions in connection with the management of the premises” as it thinks fit, which would in this instance include the maintenance of the sewage plant.
As the management of the plant would be dependent on collecting sufficient service charges and estate rent charges, conceivably the tribunal could transfer the freeholder’s right to receive estate charges to the newly appointed manager.
This topic raises almost as many questions as it does answers but what is clear is that where an estate has a blend of freehold and leasehold properties, there needs to be open communications between all parties and a clear plan for how maintenance works will be both managed and funded.