Migrating to managing agent from residents’ management Co?

I feel for you. I was in exactly the same situation as Co. Sec of our share of freehold company of 14 flats. Many of the owners were elderly and unable to step up. There were 3 of us, then the treasurer died, leaving us with an even bigger headache. The increase in regulations placed us under increased pressure, and I decided to sell up. We had no option but to bring in a MA, and called a shareholders meeting to explain the reasons and the potential service charge increase. Some came, some didn't. We would still remain as directors, and could manage the MA and keep costs in check. New directors would be sought as flats changed hands in the future.

In my experience, apathy reigns in circumstances such as yours - leaseholders can be quick to complain about costs and services but will not step up to assist with the management, which as you say, can be quite onerous.

Just appoint appropriately qualified managing agents (ideally ARMA). It is important that they have the relevant experience in the field of Block Management, and then put your feet up.

There is no need to close down the company and the freehold need not be impacted. There will still need to be some contact and decision making function between the agents and the company, but the agents should do the 'heavy lifting' and compliance etc for you.

As above, we had a very unpleasent person move into the block and no longer wanted the hassle and abuse. It costs a bit more but the block management company does everything. Worth every penny.

The function of the limited company is to enforce the lease covenants obligations as landlord /lessor are performed and lease covenants are performed by the tenants/lessees. Flat owners wear two hats
1. As shareholders with voting rights under Articles and Directors owe fiduciary to the company as a separate legal entity/personality under Companies Act and
2. As lessees with obligations under their Leases.
Shareholders vote on contract with a MA and as lessees right to be consulted under Section 20 Landlord &tenant act 1985.
It depends what you want to hive off and what to keep in house. It will depend how much the service will cost and added to service charge and response from flat owners to extra charge

Thanks. I appreciate every response and the benefit of your similar experiences. I'm still left wondering though, with regard to the Ltd company, what would happen if, after appointing a managing agent, we both chose to resign our Director roles, for example if we both wished to dispose of our flats, or simply no longer wished to be actively involved.

Reply to the comment left by RichM at 12/04/2023 - 15:41
The limited company will stay in existence as the freeholder of the property.

The question of directors is not getting any easier as they have full commercial liabilities, but are usually lay people in this scenario. The ideal situation wpoiul;d be for every flat owner to be a director, but unless the Articles of Association require it, you cannot insist on it.

A good managing agent should, however, be there to help the directors so they need to be chosen wisely.

My firm has just resigned from a block management where the sole director wanted to resign and no replacements were imminent. Addded to some issues with the property we felt it best to get out.

You could sell the freehold and remain as leaseholders only, but you would no longer retain the control over cost and services that you have currently. Perhaps the suggestion would encourage some of the other leaseholders to step up?

Reply to the comment left by Graham Bowcock at 12/04/2023 - 16:43
As an inducement to participate as an 'active' director, can the freehold company pay 'expenses' to the director(s)?

Using the word "expenses" correctly (i.e. not as an MP), then the directors should not be out of pocket.

Taking the broader sense, then there's no reason why a director cannot receive some form of payment, maybe an honorarium, to reflect time spent for the general good. I have been involved with charities where, for example, the secretary received such a payment. The only thing is to be transparent about it.

Reply to the comment left by Graham Bowcock at 13/04/2023 - 13:20We never asked for, or expected payment for running our share of freehold company, but it did take a lot of our free time. Fine, if you're retired [I wasn't at the time], but hard to balance if you have a demanding job. The Managing Agent we appointed charged a management fee, which we signed off. Maybe, we should have also charged a management fee for our work. This will become more of an issue if/when Commonhold takes off.