Linda Convery, partner, Lewis Silkin LLP
Be seen and heard
Social landlords are in danger of being shut out of estate management
With the advent of mixed tenure schemes, social landlords are finding that they are not always in sole control of the management of their stock.
Private developers may have made estate management arrangements, giving little thought to the fact that some of the housing will be owned by a social landlord, which needs to meet regulatory requirements when it comes to housing management.
Management companies
The most frequently-used model for these management arrangements is where the developer sets up a resident management company to manage the whole development. All the leaseholders, including the social landlord, become members or shareholders of the company when they purchase.
The developer often appoints a managing agent to undertake the day-to-day management of the estate and even though it will be contracted by the resident management company, the managing agent may not have any experience of managing affordable housing and what that entails.
Voting rights
The developer often buys the resident management company ‘off the shelf’, with a ready made constitution, which provides that each member (owner) has one vote regardless of the number of units they hold.
A social landlord holding a block of units is at a disadvantage with this arrangement as it will still only have one vote, even though they may have a significant presence on the estate. Therefore, the social landlord’s ability to influence the way the estate is managed will be limited.
Ideally, developers and social landlords should work together in setting up the constitution of the company, to avoid difficulties further down the line. Alternatively, it is possible to amend the articles of the company, but only if 75 per cent of the members agree.
If, by the time the parties realise amendments are needed, the developer has already sold a number of private units, the developer will need to seek the consent of the private leaseholders to the change. At best, this will cause a delay to matters proceeding. At worse, if the resolution is not passed, the social landlord may be prevented from acquiring more votes.
Representation
Not only should the social landlord seek enhanced voting rights, it should also make sure that its residents are fully represented on the company’s board.
The articles of the company should stipulate that the board of directors must include an employee of the social landlord. Where the social landlord has granted shared ownership leases it would be wise to state that another director must be someone who owns a shared ownership unit.
By making sure these arrangements exist, a social landlord can ensure that the estate is running smoothly and any regulatory requirements are being properly implemented.
Have your say
You must sign in to make a comment