Under the Landlord and Tenant Act 1985 a group of leaseholders who hold houses or flats on tenancies/leases from the same landlord upon similar terms have the right to establish a recognised tenants association. The RPTS (Residential Property Tribunal Service) defines a tenants/residents association as ‘a group of leaseholders that pay variable service charges – service charges that the landlord can vary from year to year, depending on running costs in the building’. It also says that the legal rights of an officially-recognised tenants association include the right to:
- Ask the landlord for a summary of service charge costs each year;
- Inspect the accounts and receipts;
- Propose names of contractors for inclusion in any tender list when major works are to be done and costing individual leaseholders more than £250;
- Request details of the insurance policy for the building;
- To be consulted on the appointment or re-appointment of a managing agent for the building;
- Be sent a copy of estimates obtained by the landlord for intended work to their properties;
- Appoint a surveyor who will have rights of access to the property and to the documents retained by those who manage the property.
Note: It is only when it has been officially recognised by the freeholder landlord that it has the full legal rights to be consulted by the landlord on major repairs and other works, and to obtain certain information from the landlord.
A residents association can begin functioning as soon as it has been set up, even if it only has two members. Membership may be extended to other individuals with a common interest (for example sub-tenants) but they will not have voting rights and cannot be party to the proceedings of the association because their rents are fixed rather than variable.
Membership will not be open to landlords personally or, in the case of company landlords, their employees or directors.
A management company (including its directors, employees, Members or shareholders) which has purchased the freehold on behalf of the tenants (lessees) cannot be a Member (s) of a Tenants Association, because on collective enfranchisement (buying the freehold) the company effectively becomes the landlord of the building.
GAINING OFFICIAL RECOGNITION
There are two ways for a residents association to gain official recognition.
- The first is to write to the landlord and request written recognition. If written confirmation is received that the landlord recognises the residents association then no further action need be taken. The landlord is not allowed to withdraw his recognition without providing at least 6 months written notice to the Association
- If the landlord refuses to recognise the Association or withdraws recognition then the group can apply for recognition to the nearest Rent Assessment Panel of the RPTS in whose region the properties are located.
An application form can be obtained from a Panel office and the Association will need to supply with its application the following:
- A copy of the rules and constitution;
- A list of members and their addresses;
- The name and address of the landlord;
- A description and the address of the building or buildings;
- Copies of any correspondence that is relevant to the application for recognition, including correspondence with the landlord.
In the first instance the Case Officers who comprise the administrative staff of the Panel will deal with the application along with all correspondence and will continue to deal with the paperwork until the final decision is reached. They are able to advise on the process and procedures relating to the application but they cannot provide legal advice about the law relating to the application.
The landlord will be sent copies of the documentation who will be asked to explain in writing why he is refusing recognition and the Panel copies these to the residents association.
When all comments have been received the Case officers will place the application and any comments before a Member of the Panel for consideration. The Member of the Panel will have been nominated by the Panel President or Vice President and he will decide whether recognition will be granted. The Member will be a qualified lawyer or a valuer (a surveyor with experience of the management of housing property).
Note: It’s the Panels practice to pass copies of documentation received from a party to any other interested party and for that reason correspondence that is sent with the words ‘without prejudice’ or ‘in confidence’ cannot be accepted.
GRANTING OFFICIAL MEMBERSHIP
When deciding whether to grant official recognition, the Rent Assessment Panel will look at several factors, including the number of members. It will also look at whether the association is run in a manner that is ‘fair and democratic’, ncluding whether it has proper rules regarding the following:
- Openness of membership;
- Election of a secretary, chairperson and other officers;
- Payment of a subscription and the amount payable;
- Obligatory annual meetings;
- Notices of other meetings;
- Voting arrangements and quorum (only one vote per flat or house is permitted);
- Independence from the landlord.
It will also have to be certain that the actual Membership of the Association will represent a significant proportion of the potential Membership. The RPTS says that the Rent Assessment Panels usually expect at least 60% of qualified residents in a building to belong to the Association.
In very exceptional circumstances, if a dispute of fact cannot be resolved by correspondence, the Member may arrange an oral hearing.
Certificate Of Recognition
If the Panel grants recognition it issues the association with a Certificate of Recognition usually valid for 4 years and when the it expires the Association can apply for renewal. The Panel can also cancel a certificate at any time if it considers that the association no longer merits recognition.The issue of recognition is normally decided purely by correspondence and there is no charge for the application although both parties must meet their own costs.
A Residents Association allows a block of flats to speak as a group which allows many problems to be nipped in the bud. It has its own constitution, rather than one being offered by a managing agent. It allows those that own and manage the block a single point of contact so that changing management, challenging service charges or even buying the freehold can be more effectively achieved. It also prevents individuals from taking on extensive legal responsibilities such as becoming an RTM Director.