One of the key issues in UK leasehold and fleecehold is the control and appointment of managing agents for blocks of flats.
If a managing agent is underperforming or overcharging, there is generally no effective remedy other than appointing a replacement managing agent. However, the power to make such an appointment might not be held by those actually owning the flats and paying the service charge.
Management of a building is a natural monopoly: you can't have multiple players with the authority to fix the roof or insure the building. The general solution is to establish a corporation whose sole remit is taking control of the building, and allowing the directors of this corporation to delegate day-to-day management to a specialist agent who might actually be managing many buildings up and down the country. The question then devolves into ensuring that those directors are adequately accountable to the relevant stakeholders, namely the owners of the flats who are paying the service charge.
There currently exist the following statutory and non-statutory schemes that achieve this:
But in some circumstances, a building is ineligible for any of commonhold, Right To Manage or a collective enfranchisement that would empower a Resident Management Company. We could expand eligibility up to a point, but in practice there will remain a "residuum" of buildings that just can't be part of these statutory schemes, because of their shape or because residential flats are only a trivial part of the floor space. What of these?
Essentially, my solution is not to allow service charges in buildings containing at least two flats let on long leases, unless any managing agent for the building is appointed by a fully mutual body comprising the owners of the flats.
"Fully mutual" here just means that the body comprises *only* the owners of flats in the building, and doesn't include voting rights for anyone who *isn't* one of these owners. This is intended to exclude cases like a shared-freehold were only some of the flats own shares, or situations like my own block, where all the flat owners are members of the management company, but can't vote (and in any case we share membership with house owners outside the block).
Obviously, commonhold and RTM and many RMCs are already fully mutual, and so they would be outside the proposed ban.
The ban would work along the same lines as section 47 of the Landlord & Tenant Act 1987: that law makes service charge demands invalid if they conceal the landlord's name and address. My proposed ban would require the service charge demand also to include a statement explaining to the flat owners by what mechanism they could appoint a new manager. If the flat owners had simply failed to avail themselves of their rights to exercise the Right To Manage, or to buy the freehold, or convert to commonhold, the service charge demand could simply point that fact out.
But of course there are very serious cases, particularly in London's Docklands, where buildings are designed precisely to prevent leaseholders from controlling the building management and leave them open to extreme financial exploitation. In such a block, none of these statutory schemes is available. So under my ban, the landlord and manager would not be able to charge any further service charges until such time as they had voluntarily established a leaseholder-controlled fully mutual corporation and granted it the power to appoint the managing agent for the building. The private sector would have to do the legal legwork in these contrived and egregious cases.