Mark Chick | Head of Landlord and Tenant
Recently the Financial Times published an article titled: Neighbour vs neighbour: the perils of taking control of your block of flats.
I was delighted to be quoted in that article.
Unfortunately disputes at owner-managed buildings are quite common and often end up with different parties requiring legal advice to settle disputes.
While the desire to manage one’s own building is very strong, unfortunately different people with different personalities do not always agree and get on. Different outlooks, and occasionally incidents of people trying to use the system for their own advantage, can result in disputes that invariably become heated.
The article focused on the experiences of two anonymous leaseholders. One of the two purchased a share of the freehold of his small London flat along with other flat owners, some of whom subsequently took over the responsibility for managing and maintaining the building, with an annual budget of around £1m. After a few years, problems started to occur and relationships between different factions deteriorated to such as extent that it culminated into a revolt, pitting neighbour against neighbour.
This particular incident resulted in a group of neighbours banding together to engage lawyers and force an AGM to eventually remove the directors. Self-managing a block of flats often results in the buildings being better run than landlord-managed properties, but it does depend on the qualities of the volunteers. Foremost among these is competence, but closely followed by integrity and rationality, and the ability to communicate effectively.
The second case study in the article focused on the resident of a central London block, who believes that the management board is not acting in the best interest of leaseholders, but cannot see how to resolve the issue. With service charges rising to more than £10,000 a year, the depletion of the building’s reserve fund, combined with a deteriorating building that is impacting values, the leaseholder is at a loss as to what he can do.
There is always the option to take legal action against the management company, but a case in county court can easily run up costs of £20,000 – £30,000 (and maybe more)– and the sting in the tail is that the leaseholders will be using their own money against the management company, who will also be using the leaseholder’s money to fight the case in the form of the building fund. So effectively leaseholders fighting against themselves and the matter can become not only expensive but also circular.
Whilst there are provisions allowing the flat owners to resist an application made to add the costs of tribunal proceedings to the service charge account under Section 20C of the Landlord and Tenant Act 1985 these are discretionary and there is always the risk in a self-managed situation where the flat owners own the freehold company that an adverse order in costs against the company might make it insolvent if it does not have the resources to pay. That will also become potentially circular as if that were to happen then the leaseholders would most likely have to apply to have the company restored to the register and in so doing pay off the debts.
In an extreme case of a dispute between flat owners and their own freehold company may result in the freehold company seeking to make a ‘cash call’ on its members to cover the debts that it has incurred provided that its articles allow this to be done. This once again may well lead to ‘circularity’ and all leaseholders being required to contribute ‘by the back door.’
As so often in these cases, it often comes down to the quality of the managing agents in question and the lack of regulation of those agents employed in the day-to-day management of buildings. The Government is currently analysing the feedback received from its consultation into introducing mandatory qualifications for managing agents, which when implemented should improve the quality of management services.
One other lesson is that self-management may not be the best way – particularly if the block has any degree of scale or sophistication. The extra ‘layer’ of expense that having a manager in place presents may well be the move that saves significant expense in the longer term and preserves value for the homeowners.
The FT article lifts the lid on the experiences that some leaseholders face, and how the right to manage may not be the panacea that many hope it will be. With the lifting of the non-residential element to 50% on right to manage claims earlier the year, the government has expanded leaseholders’ access to the right to manage, but personalities and personal agendas may still impact on the smooth management of blocks.
The truth is that whatever the system of tenure, be that freehold with an external freeholder, a block where the flat owners own the freehold, or even (when introduced) a commonhold, the scope for people to fall out with each other remains. For this reason disputes are always a risk in property structures with shared elements.
Mark Chick is the Joint Head of our expert Landlord & Tenant team.
If you have a query concerning leasehold property, then please contact the experts at Bishop & Sewell’s Landlord & Tenant team by emailing leasehold@bishopandsewell.co.uk or call on 020 7631 4141.
The above is accurate as at 19 November 2025.
The information above may be subject to change. The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis
