Residential Block Management

Leasehold Management, Property Management, Estate Management or as it's most commonly known as ‘Block Management’, is the managing of all the shared or communal parts of residential buildings/managed land.

Who would usually need the services of a Block Management company?  Below are the typical clients and a bit about each of them.

Freeholders

The term “Freeholder” refers to the individual or company who owns the land on which the development’s buildings are situated. In contrast, the term “Leaseholder” refers to the individual or company who has purchased the long leasehold of a property, e.g. a flat, but who does not acquire any ownership rights of the buildings.

For buildings completed prior to June 2022, the Freeholder is likely to charge Ground Rent to the leaseholders. This charge is a fee set by the Freeholder, separate from service charges, that the leaseholder pays as a condition of the lease. This is usually paid yearly and is written into the lease and may increase over time. Freeholders of buildings completed after June 2022 may not charge ground rent. (This only applies to leasehold properties in England and Wales, but not Northern Ireland or Scotland). 

RMCs

This is a type of private company, set up by the Freeholder, Developer or the residents. The term “RMC” is an abbreviation of Resident Management Company. The Freeholder or Developer will usually appoint themselves as the first Director of the RMC. 

Once all the units have been built and sold, new Directors can be appointed from amongst the purchasers; the Freeholder or Developer will usually then resign. 

The Directors make decisions on behalf of all other leaseholders and/or homeowners (shareholders).

RTMs

The term “RTM” is an abbreviation of Right To Manage.

For developments that do not have an RMC, the leaseholders may wish to exercise their right to set up an RTM Company using the provisions afforded to them under the Commonhold and Leasehold Reform Act 2002. Legal advice must be obtained before proceeding, it should not be assumed that all developments automatically meet all the conditions necessary for RTM formation.

In general terms, setting up an RTM involves a transfer of responsibility and decision-making from a Freeholder or Managing Agent to the leaseholders. It should be noted that RTM formation does not negate the responsibility to keep the development well maintained and in a good state of repair.

Further details on what a Block Manager will do on behalf of their clients, can be found here.