Directors of a newly formed RTM company may be apprehensive and excited at appointing a managing agent once they have exercised the Right to Manage (RTM). Where does that leave the incoming managing agent with handling their expectations and ensuring a great start to the commercial relationship?
Brady Solicitors explain how managing agents can successfully manage leaseholder expectations when they are appointed by a Right To Manage Company to look after a new block, especially when dealing with the first hurdles such as recovering outstanding service charge.
Right to Manage under the Commonhold and Leasehold Reform Act 2002 has brought new opportunities for managing agents. Leaseholders embark on the RTM route for a variety of reasons; they may be looking to reduce service charge costs, replace an underperforming managing agent or simply take more control of the maintenance of their block.
The needs of the RTM
You’ve done the beauty parade and met the members of the RTM company. Hopefully during this process you will have gained a clear idea of their needs and how you are going to meet these needs. Effective communication going forward will be crucial in developing a good working relationship with the RTM Co and leaseholders.
If after all of this the RTM company’s needs remain unclear now is the time to clarify and further understand their expectations.
Balancing expectation and reality
You should take a moment to consider the expectations of the RTM company. Most newly formed RTM companies will be filled with high expectations and big ideas. You have the task of balancing the reality of the block and their expectations.
The only thing that has changed is that the leaseholders now have the power to self-manage, choose their insurance provider and appoint a managing agent. Issues such as the condition of the block, neighbour issues and any challenges created by the lease remain unchanged.
If the RTM company are expecting the block to be turned around overnight don’t feel you have to overpromise on anything. It is vital to be clear from the outset of your ability to make certain changes and establish achievable timescales.
So how do you set expectations?
You can set expectations in a number of ways but do remember that even small promises may come back to bite you quickly. So before you make commitments ensure you have the capacity to meet them.
Dedicated client logins and a direct point of contact are helpful ways you can manage the expectations of the RTM Co and maintain a good relationship.
Do take the time to carefully consider your role and how much the RTM Co really expects from this managing agreement. The RTM Co has hired you out of many others so it important that anything you agree to do can be maintained for the duration of the contract.
Well-drafted Terms of Appointment will help set out clearly what is expected from both parties in this agreement. If you don’t know what should go in your Terms of Appointment, this useful blog lists the essentials.
Outstanding service charge
A difficult relationship with the previous managing agent may have contributed to increased service charge arrears. Whilst outstanding service charge is a topic neither parties may really want to talk about, it is worth having this conversation as early as possible. Any outstanding service charge will impact on the funds you will have available for managing the block after the handover and you won’t be able to do what the RTM company expects you to do.
Before you send out demands for arrears, we would advise managing agents to communicate openly with the leaseholders and outline any new credit control processes. Funds flowing into estates will ensure you have the service charge revenue to effectively deliver on some of your promises pre-appointment.
The expectations going forward
Managing expectations is a huge part of a managing agent’s job especially when it comes to working with newly formed RTM companies. It’s a balancing act that requires careful consideration so both parties are confident in their obligations and service levels from Day 1.
Understanding the needs and wants of the RTM before the handover helps to set the expectations which you can aim to exceed long after the handover period.
If you need an experienced eye to look at your Terms of Appointment or need help with recovering service charge arrears Brady Solicitors’ RTM experts would be happy to advise, simply call us on 0115 985 3450 or click here to send us an email.