The undoing of a managing agent written into the lease

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Development: St George’s Park
Location: Littlemore, Oxford
Number of properties: 172

St. George’s Park is a mixed tenure development of 172 properties, a combination of new build flats and houses with a 170-year-old manor building (122 properties) as the centre piece.

The problem

It is an all-too-common practice, especially for larger managing agents, to get themselves written into lease agreements as a named party. Getting out of such an arrangement is complicated and costly but the good news is that it can be done.

The managing agent, a large national company that has been mentioned on more than one occasion during prime minister’s questions (and not in a good way) was appointed by the developers and had themselves written into the leases as a party.

Whilst the leases had a provision to remove them, considerable barriers existed in that the requirements were

– 75% of the owners must indicate to the agent, in writing within a six-month period that they wish to remove the incumbent managing agent.
– At least 50% of the same owners must agree on a replacement managing agent.

The solution

Following more than a decade of woeful management, a highly motivated residents association managed to achieve the above and Common Ground were informed in May 2015 that they were the successful bidder following an extensive tender process.

“Common Ground were appointed based on the transparency of their service, especially the accounting side with Xero. Whilst there was no evidence of fraud there was unwise expenditure and, as a group of leaseholders with little trust in the incumbent agent, the ability to oversee the finances in real time was critical.” Stated Kunku Soota, chair of the then resident’s association that led the campaign to enact change.

Incredibly, the incumbent agent wouldn’t allow the full transfer of the management until at least 85% of the properties had agreed deeds of release and novation………another legal move designed to protect their business. This took a further two years and £30,000 in legal fees.

“Common Ground’s legal department agreed to take on the administrative burden project of producing and co-ordinating the project to obtain the deeds of release and novation and this undoubtedly saved us several thousands of pounds.” Stated Soota “It also accelerated the removal of an unwanted and underperforming agent.”

“This case study is a great example of what can be achieved by motivated residents in conjunction with a knowledgeable and committed managing agent”. It took four years to prise the management away from the incumbent agent, but the resident’s association were very well led and it was a real team effort to get this done but it gives hope to other developments tied into such dubious agreements” stated Alan Draper. Managing Director of Common Ground.

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