Taking back control of a Residents Management Company, a case study, pt 7

Having gone through the whole rigmarole of how one might work out who is a member of the estate's RMC and why, how does it all fit together with day-to-day management?

Management Company versus Managing Agent

The Management Company (the "RMC") can delegate pretty much all its responsibilities to a managing agent.

You'll generally find that management companies are non-profit, and restricted to a particular estate or block of flats. They might have SIC Code "98000 - Residents property management" if you look them up on Companies House. An estate-specific management company will generally be named in the leases and transfer deeds for that estate. On the Land Registry, you'd find a restriction on the title, saying "this property can't be sold unless the management company has provided a certificate saying that the owner has fulfilled his/her obligations to the wider estate". The members of the management company will be those who own property on the estate.

A managing agent, on the other hand, will generally be a commercial, for-profit company, that manages property as its main line of business, anywhere in the country. It might have SIC Code "68320 - Management of real estate on a fee or contract basis".

The relationship between a management company and a managing agent is one of customer and supplier. The RMC is the customer of the MA. Or at least, *should* be. This allows the residents/owners on the estate to replace the managing agent from time to time. This is generally more effective than serially litigating over service charges.

What has happened in practice

It was an enlightened housing association that set up the RMC that is under discussion in this series of posts. Letting social tenants have a say over management was unusual in 2004.

And it is not often that I have anything nice to say, whatsoever, about housing associations and their staff. But credit where credit is due: in principle, the RMC they set up in this case went well beyond the management control that social/affordable housing tenants would normally get.

There have been three problems:

• the RMC was set up with a privileged member, whose powers to control the RMC only lapsed in 2022. I'm not really going to go into that here, because I have written elsewhere at interminable length on that issue as it affects RMCs across the country
• there is a supposed "step in" clause which allows the housing association to oust the RMC in certain circumstances
• the RMC was allowed to fall into a state where the managing agent himself controlled the board of directors; this managing agent benefited from the "privileged member" status mentioned above

In any case, since 2022, the members of the RMC, whoever they are, should have been able to take control of the board of the company, and thereby hold the managing agent do account or choose a new one. But attempts to do that have been frustrated.