How to avoid the FTT
We are grateful to Siobhan McGrath, President of the First-Tier Tribunal (Property Chamber), for providing this insight.
It may come as a surprise that I am writing an article which explores ideas for avoiding the FTT but in fact it is all part of the service. The Tribunal works successfully if it works in partnership with parties and I consider that the Tribunal is a remedy of the last resort. We appreciate that the job of a residential property manager is not always easy. Here I reflect on the types of case that frequently come before the Tribunal so that readers have some pointers as to how to avoid us. I should emphasise that this is a reflection rather than the result of an analytical exercise but hope that it will nonetheless be helpful.
Firstly, a general observation: in many cases it appears that leaseholders are unclear what service to expect under each head of cost. To take a simple example, if the lessees are not told how many hours of cleaning per week are going to be provided they may have unrealistic expectations of the standards that are to be met and then make a well-intentioned but misguided challenge. The answer is straightforward: give the lessees clear information about the services that are to be provided with sufficient detail so that their expectations are correct.
An associated point is that we see cases where there is a lack of supervision or monitoring of the provision of services. Managing agents may set up systems for maintenance and repair of properties but do not carry out checks to see that the services are actually being provided. In some cases they are not.
For major works challenges vary and may include allegations that the standard of work is poor or inconsistent, that the supervision of the work was inadequate and that the cost is too high. When dealing with this type of case the Tribunal will wish to see evidence of good and clear communication with the leaseholders. Although consultation under section 20 will assist as a demonstration of transparency, where major works are concerned we would also expect to see an early sharing of plans and accurate information about expected costs. We would also want to know that the management of the contract is audited and evidenced.
The key to avoiding the FTT is communication and transparency. It is unrealistic to expect that in every case the landlord and leaseholders will be in accord about everything but a measure of agreement is very likely. If there is general opposition to a course of conduct in respect of a building it is more likely than not that a mistake has been made or plans need to be reviewed.
Challenges to management fees may be made because the level of service provided is alleged not to be up to scratch. This may not be because the service is poor but because the lessees have not been informed what the managing agent is going to provide under their contract. This can be addressed quite simply writing to lessees to explain the manager’s regular duties for the fee that is charged.
It is inevitable that from time to time there will be disputes. In our experience one of the main reasons that disputes escalate to the Tribunal is a failure to address the problem promptly and thoroughly. Whilst accepting in some cases this will not be possible, in other cases correspondence is simply placed in the “too difficult” tray. Although the pressure of conducting day to day business means that it is difficult to find time to deal with complaints, I would suggest that this is in fact one of the fundamental tasks for a property manager. Property maintenance can be complex and relationships between landlords (whether RMC RTM or independent landlords) and leaseholders can be complex. Issues relating to the property, no matter how small, inevitably need time spent on them.
Finally, it is vital that you have read and understood the lease. It is the basis of the contract between the landlord and the tenant. Make sure you understand the mechanics for interim charges. Make sure that budgeting is evidenced and that estimates are reasonable. Provide service charge statements promptly.
I hope this does not come across as unrealistic. The Tribunal has judges and members who are experienced and practical. The best advice I can give to avoid FTT proceedings is to have and to implement a sound management plan, to communicate with both the landlord and the lessees, to answer correspondence and to be patient.