How to Deal With a Bad Property Management Company: Leaseholder Rights and Remedies

The Problem With Property Management in England

England has approximately 4.9 million leasehold homes, the majority of which are subject to some form of property management arrangement. The freeholder or their appointed managing agent is responsible for maintaining common parts, procuring buildings insurance, managing major works, and collecting service charges.

The relationship between leaseholders and managing agents has historically been characterised by information asymmetry, weak accountability and limited effective redress. The Leasehold and Freehold Reform Act 2024 has significantly strengthened leaseholder rights, though many remedies existed before it and remain underused.

Understanding the Legal Framework

The primary legislation governing leaseholder rights against managing agents includes:

• **The Landlord and Tenant Act 1985** — sets out rights to a summary of service charges, rights to inspect accounts and receipts, and the reasonableness test for service charges.
• **The Landlord and Tenant Act 1987** — gives leaseholders a right of first refusal when a freehold is sold, and rights to appoint a manager or acquire the freehold through the courts.
• **The Commonhold and Leasehold Reform Act 2002** — introduced Right to Manage, statutory consultation requirements for major works (known as Section 20 consultation), and the Leasehold Valuation Tribunal (now the First-tier Tribunal).
• **The Leasehold and Freehold Reform Act 2024** — extended service charge transparency rights, extended the ban on residential ground rents, and reformed the process for collective enfranchisement.

Your Right to Challenge Service Charges

Service charges must be "reasonable" under section 19 of the Landlord and Tenant Act 1985. Leaseholders can apply to the First-tier Tribunal (Property Chamber) to determine whether a service charge is reasonable, whether the standard of services or works was adequate, and whether the charge was incurred in accordance with the lease terms.

Key rights relating to service charges:

**Right to a written summary:** Under section 21 of the Landlord and Tenant Act 1985, leaseholders can require a written summary of the costs that make up the service charge within one month of request (six months if the accounting year has not ended). Failure to comply is a criminal offence.

**Right to inspect documents:** Within six months of receiving a summary, leaseholders can require access to inspect accounts, receipts and other documents supporting the charges.

**Section 20 consultation:** For qualifying works (costing any leaseholder more than £250) or qualifying long-term agreements (lasting more than 12 months and costing any leaseholder more than £100 per year), landlords must follow a statutory consultation procedure under section 20 of the Landlord and Tenant Act 1985. Failure to consult limits the amount recoverable from any leaseholder to £250 for the relevant works.

**Leasehold and Freehold Reform Act 2024 extension:** The 2024 Act extends transparency rights further, including requiring more detailed service charge demands with standardised prescribed information, giving leaseholders the right to challenge their buildings insurance arrangements, and requiring freeholders and managing agents to provide information packs on request.

Right to Manage

Under the Commonhold and Leasehold Reform Act 2002, leaseholders in qualifying buildings can exercise the Right to Manage (RTM) — taking over management of the building from the freeholder without buying the freehold and without needing to prove fault on the part of the existing manager.

Requirements for RTM:

• The building must be a self-contained building or part of a building, with at least two flats.
• At least two-thirds of the flats must be held on long leases (over 21 years).
• At least 50% of the total number of flats in the building must participate.
• No more than 25% of the building's floor area may be used for non-residential purposes.

The process involves forming an RTM company (a company limited by guarantee), serving a Claim Notice on the freeholder, and assuming management on the Acquisition Date (at least three months after the Claim Notice). The freeholder can oppose the RTM only on the grounds that the requirements are not met — they cannot refuse on grounds of the leaseholders' ability to manage.

The Leasehold and Freehold Reform Act 2024 removed the previous restriction that prevented RTM in buildings with up to 25% non-residential use from exercising RTM if the non-residential proportion was over 25% — broadening the eligible building types.

Applying to Appoint a Manager

Where RTM is not available or appropriate, leaseholders can apply to the First-tier Tribunal under section 24 of the Landlord and Tenant Act 1987 for an order appointing a manager. This is a more adversarial route and requires demonstrating that the current manager has breached their obligations — for example, by failing to carry out repairs, misapplying service charge funds, or failing to maintain proper accounts.

Practical Steps When Facing a Poor Managing Agent

1. Document everything: keep records of all written communications, service charge demands, outstanding repairs, and any failures to respond.

2. Write formally to the managing agent, citing the specific obligation being breached and the legislation or lease clause requiring it.

3. Escalate to the freeholder if the managing agent is unresponsive.

4. Check whether the managing agent is a member of a professional body (RICS, ARMA, IRPM) and consider a complaint to that body.

5. Apply to the First-tier Tribunal for a service charge determination if specific charges are unreasonable.

6. Organise fellow leaseholders and consider RTM if persistent mismanagement is the issue.

Property Passport UK enables leaseholders to store their lease, service charge demands, correspondence and major works notices in one organised place, creating the contemporaneous record that is invaluable in any dispute.