Freeholder/Landlord and Leases

The Freeholder (aka Landlord) is the legal entity which owns the freehold title of the block. In our case it is CVRA Ltd. You can read about how and why CVRA Ltd acquired the freehold on the History page.

CVRA Ltd is owned by it's shareholders who are all Leaseholders (i.e. owners of flats) in City View.

When you purchased your flat you actually purchased a lease and entered into a contract with the freeholder, i.e. CVRA Ltd. There is a considerable amount of information on the leasehold system on the internet.

The lease is a tradeable commodity (i.e. you can buy and sell it and obtain mortgages against it) and imposes obligations on both parties. Again there is a lot of information on the web but, in principle, you agree to comply with the lease obligations (e.g. certain restrictions in what you can do and the need to pay the Service Charge) and the landlord agrees to comply with the lease obligations (these are generally to do with maintaining the block and managing it well).

Leasehold law is in a constant state of flux and new provisions are generally designed to prevent abuses of the Leaseholders by unscrupulous Landlords.

The freeholder is ultimately responsible for the management of the block and for enforcing lease conditions.

The Service Charge

When you purchase a lease you agree to pay towards the maintenance and improvement of the block - this is the Service Charge. It is a legal obligation to pay the Service Charge. The level of the service charge is ultimately approved by CVRA Ltd, although since February 2021 it is set by City View House Management Ltd (company number: 11420410) which is a members company open to all Leaseholders in City View House.

The percentage of the total you pay is determined by your lease. This percentage is fixed and cannot be changed by CVRA Ltd or, obviously, yourself!

The Managing Agent/RMC

Landlords generally appoint a residential management company (RMC) as the managing agent to run the block. There are circumstances where the Landlord and the RMC are one and the same or part of the same corporate structure - this is not the case at City View.

The RMC runs the block on behalf of the Landlord although in City View's case the RMC is appointed by City View House Management Ltd (ManCo).

ManCo is a members company and all through it all Leaseholders can have a say in the management of the block.

However, ultimately the buck stops with the Landlord (because it is the Landlord which has issued the leases and it is the Landlord with which you have a contract via your lease) and therefore the Landlord retains a degree of high level control over ManCo. This control is necessary because, ultimately, if ManCo fails to perform or indulges in behaviour prejudicial to the block, it is the Landlord which bears ultimate responsibility.

Terminology

Freeholder/Landlord: The Freeholder of the block is CVRA which owns the freehold title of City View. The company's shareholders must be Leaseholders and comprise around 40% of the Leaseholders in City View. The company is run by a Board of Directors whom must be shareholders and are elected to the Board (in the event there are multiple people wanting to become Directors).

ManCo: ManCo is City View House Management Ltd (company number 11420410) which has a contract with CVRA Ltd to manage the block

Leaseholder: Leaseholders are flat owners. In other words they own the a lease on the flat. Everyone who owns a flat or workhome in City View is a Leaseholder. Leaseholders have a duty to pay the service charge and follow other lease conditions. Lease conditions are the conditions in the original flat leases which CVRA Ltd inherited when they acquired the freehold.

Tenants: Tenants rent flats from the Leaseholder. They do not own the flats and have a rental agreement with the flat owners.

Shareholders: Shareholders are those Leaseholders who own a share in CVRA Ltd. Some shareholders are original shareholders (i.e. they owned a flat in the early 1990s when the freehold was acquired - for more information please see the History page), others will have acquired their share when they acquired their flat. Shareholders must be Leaseholders and shares normally pass with ownership of the flat. It is possible for an existing shareholder/Leaseholder to sell their share to another Leaseholder who is not a shareholder. However, as the shares are valuable, it is strongly recommended you understand its value before considering such a sale.

Residential Management Company (RMC): RMCs are the companies which undertake the day-to-day management of the block. RMCs do not set the service charges. They simply implement on a day to day basis the directions of the Board which appointed them. So, while the demand for the service charge comes from the RMC, it has been set by others - namely, the Board of Directors of the company responsible for management of the block - in City View's case this is ManCo.

Note: The service charge level must be ultimately approved by the freeholder Board.

Service Charges: Service charge levels are set to cover the costs associated with the management of the block. They comprise two aspects: (i) the current account/operational expense, and (ii) the sinking fund.

The current account covers the day to day and annual operational expenses including, for example, the insurance, the porter, communal electricity and heating, ongoing maintenance, dustbins, etc.

The sinking fund is a 'savings account' which is designed to accumulate money over time to pay for major capital works. In recent years these have included the window replacement project, the lift replacement project and the new entry phone system and front door improvements. It should be remembered that the block was converted over 30 years ago and therefore ongoing major maintenance projects will be required.

The service charge for each flat is calculated as a percentage of the total service charge for the year according to the individual flat lease. Each flat has this percentage codified in the lease and has a legal obligation to pay their percentage.

The service charge is set annually (in future by the ManCo Board but previously by the CVRA Ltd Board) and is based on the previous year's costs (and any surplus/deficit) and anticipated improvements and or increase in costs and or anticipated major projects (which sets the level of the sinking fund) and the freeholder's obligations under the lease.

In this respect it should be noted that the freeholder has certain obligations under the lease (for example, to keep the block in good condition) and these, while obligations on the freeholder, are paid for via the service charge. So the Service Charge is set taking into account these obligation which include implementing the recommendations of the external surveyor.

Every improvement and every expense associated with the block is paid for via the service charge account and the amount of the service charge account is set by each individual flat lease.

Page created 4th March 2021 - please see the disclaimer in the Legal and About page.