108a & 108b Holden Road, London, N12 7EA LON/00AC/LAM/2022/0025
DECISION
[1]This is an application made by the Applicants under section 24 of the Landlord and Tenant Act (as amended) (“the Act”) for an order in respect of 108a & 108b Holden Road, London, N12 7EA (“the property”).[2]The property is described as a semi-detached house converted into two maisonettes. The Applicants are the lessees of Flat 108a Holden Road. The Respondents are the joint freeholders of the property.[3]The various management failures complained of by the Applicants are set out in the witness statement of the Second Applicant, Mrs Slonims dated 24 February 2023. For reasons that will become apparent, it is not necessary to set these out. The Law[4]Section 24 of the Landlord and Tenant Act 1987 provides: "(1) A leasehold valuation tribunal may, on an application for an order under this section, by order appoint a manager to carry out, in relation to any premises to which this Part applies-(a) such functions in connection with the management of the premises, or(b) such functions of a receiver, or both, as the Tribunal thinks fit. (2) A leasehold valuation tribunal may only make an order under this section in the following circumstances, namely- (a) where the tribunal is satisfied- (i) that any relevant person either is in breach of any obligation owed by him to the tenant under his tenancy and relating to the management of the premises in question or any part of them... (ii) ... (iii) that it is just and convenient to make the order in all the circumstances of the case; (ab) where the tribunal is satisfied- (i) that unreasonable service charges have been made, or are proposed or likely to be made; and (ii) that it is just and convenient to make the order in all the circumstances of the case; (aba)... (abb)... (ac) where the tribunal is satisfied- (i) where any relevant person has failed to comply with any relevant provision of a code of practice approved by the Secretary of State under section 87 of the Leasehold Reform, Housing and Urban Development Act 1993 (codes of management practice), and (ii) that it is just and convenient to make the order in all the circumstances of the case; (b) where the tribunal is satisfied that other circumstances exist which make it just and convenient for the order to be made. Hearing[5]The hearing took place on 5 June 2023. The Applicants were represented by Mr Woodhouse of Counsel. The Respondents were represented by Mr Owen, a Solicitor.[6]The Respondents had not filed or served any evidence in the case. When this was raised with Mr Owen, he said that that they were consenting to the appointment of the Applicant’s proposed manager, Mr Green.[7]Therefore, the only issue before the Tribunal was whether Mr Green possessed the relevant knowledge and experience to be appointed as the manager of the property.[8]This was set out in two witness statements prepared by him together with a draft Management Plan for the property.[9]In addition, the Tribunal conducted its own examination of Mr Green in relation to this property management experience.[10]Mr Green told Tribunal he had no formal training or qualification in property management. His interest in property management started in or around 2011 when he took on the management of his own property portfolio and those of some family members. It was in 2018 that he accepted third party property instructions to manage residential property. His sole trader business now manages some 102 units over some 15 sites, one site has 62 flats and the remaining sites between 2-4 flats.[11]Almost all the leasehold properties he manages hold a share of the freehold. He has no experience of managing blocks of flats with freeholder interest.[12]The services offered to his clients varies. At the 62 flat block he is not responsible for the issue of service charge demands, at the other properties his company carries out a full management role. The company does not operate a client account for either annual or reserve service charges. He told Tribunal that all his 40 or so clients operate property specific service charge accounts and he uses these accounts to deposit monies and make payments.[13]After review of the witness statements and hearing evidence the Tribunal had a number of reservations about Mr Green’s intention to act as Manager of the Property. These include: - The lack of any formal property management training and qualification; - limited knowledge and experience of residential management and in particular the requirements of the RICS Service Charge Residential Management Code; and - no established governance for client monies within his company and specifically, no business client account. His company is not Regulated by the RICS or ARMA.[14]The Property comprises two dwellings with no common areas. This type of property should present a straightforward management situation that demands practical management skills with a reliance upon consultants for professional expertise. Mr Green’s responses to Tribunal questions revealed knowledge of the statutory property management requirements including those relevant to section 20 consultation. The Tribunal concluded Mr Green has acquired many of the necessary skills and knowledge from his exposure to the procedures adopted by other managing agents since 2011. They would encourage him to improve his knowledge of the RICS guidance and adopt this unequivocally in his property management of this Property.[15]The Tribunal was also concerned at the lack of governance of client monies. It was not clear from his submission whether Mr Green was authorised to make payments to contractors at the various properties he managed or his role in accounting for receipts and expenditure.[16]Mr Green confirmed to the Tribunal that it is his intention to open a client monies bank account. The Tribunal endorsed this proposed action. They also recommend a further bank account is opened for the deposit of reserve account monies. This is to ensure compliance with the RICS code.[17]The Tribunal is cognisant of the fact that Mr Green is not a member of the RICS and, therefore, will not be subject to formal financial scrutiny and external supervision. The Tribunal intend to apply a condition that a Chartered Accountant must inspect the client accounts every six months to ensure compliance with RICS standards. After each satisfactory review, the auditors shall issue a certificate of satisfactory compliance, which would be attached to the six monthly reports to Tribunal.[18]The Tribunal is aware of the short comings of Mr Green in terms of his experience, formal training and business governance but recognise few managing agents are interested in managing a two dwelling block property. He has practical experience of property management. He exhibits a commitment to address the concerns held by the Tribunal. The additional conditions and supervision proposed will further support Mr Green and enhance governance.[19]After careful consideration the tribunal is persuaded to approve his appointment as Manager of the Property. The management order is annexed to this decision. Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28 day time limit, such application must include a request for an extension of time and the reason for not complying with the 28 day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).