For managing agents, the lease contains the guideline to how a block is run. It sets out not only what leaseholders can and cannot do, but also the freeholder’s rights and responsibilities. Yet in practice, lease terms are often overlooked until a problem arises—whether that’s a challenge to a service charge, a breach by a leaseholder, or compliance with new legislation such as the Building Safety Act.
Understanding the lease from the outset is one of the most effective ways for managing agents to protect both their freeholder clients and the long-term stability of the block, whilst also supporting efficient management of the block.
1. The Building Safety Act and Lease Obligations
The Building Safety Act places new responsibilities on freeholders and, by extension, managing agents. The lease will dictate how costs linked to safety works can be recovered, what consultation is required, and whether certain expenditure is even recoverable from leaseholders at all.
Without clarity on the lease, managing agents risk either failing to recover essential costs or facing disputes over charges. Additionally, in the current climate of increased scrutiny around building safety, getting this wrong can have significant financial and reputational consequences.
2. Service Charge Demands and Collection
Service charge recovery is one of the most common sources of dispute. The lease sets out:
- How service charges should be demanded.
- When payments fall due.
- What costs can (and cannot) be recovered.
A demand issued without following the exact lease requirements could be challenged, leaving the freeholder out of pocket and the block’s cash flow under strain. By ensuring demands align with the lease, managing agents can avoid unnecessary disputes and secure smoother collection. A detailed guide on issuing service charge demands can be found here.
3. Identifying and Managing Breaches of Lease
From unauthorised alterations and subletting, through to non-payment of charges, breaches of lease are an inevitable part of block management. The ability to take action depends on knowing what the lease actually says, and therefore what it enables a managing agent to do.
For example, one lease may prohibit subletting entirely, while another might allow it with freeholder consent. Similarly, rules around pets, noise, or alterations can vary widely. Clear knowledge of the lease terms ensures managing agents can act quickly, consistently, and fairly when breaches occur.
4. Avoiding costly mistakes and disputes
Many disputes end up at the First-tier Tribunal or in court simply because lease terms weren’t properly followed. Whether it’s an invalid demand, a wrongly applied charge, or a failure to consult, the consequences often include wasted costs, delays, and damage to relationships with leaseholders, as well as possible reputational damage. By knowing the lease inside out, managing agents not only avoid these pitfalls but also give their freeholder clients confidence that the block is being managed correctly and lawfully.
Conclusion
Whilst it may seem relatively straightforward, we regularly see cases where confusion or a lack of clarity over lease terms has led to avoidable disputes. Our advice to managing agents is clear: make the lease your starting point in every decision you make.
Whether it’s building safety, service charge collection, or dealing with leaseholder breaches, the lease holds the key. If you’re ever unsure about the wording of a lease or what it means in practice, our leasehold specialist solicitors can review it for you—giving you clear guidance on how it should be interpreted and the implications for block management.
