Management Company Problems When Selling a Flat

If you own a leasehold flat, your management company is an unavoidable part of the selling process. Whether it is a professional managing agent appointed by the freeholder, a residents' management company run by the leaseholders themselves, or the freeholder acting as their own manager, this organisation holds the keys to information your solicitor needs, your buyer expects, and the mortgage lender demands.

When the management company is well run and responsive, the leasehold selling process runs relatively smoothly. When it is not, sellers can find themselves dealing with delayed management packs, excessive fees, incomplete information, and poor building maintenance that puts buyers off entirely. This guide explains the problems you may encounter, how they affect your sale, and what you can do about them.

Common management company problems

The problems sellers encounter with management companies tend to fall into several categories. Some are minor inconveniences that add a week or two to the timeline. Others are more fundamental and can threaten the sale itself.

Slow or unresponsive communication

The single most common complaint from leasehold sellers is that the management company is slow to respond to enquiries and requests. This affects the sale at multiple points:

• Delayed management pack. The leasehold management pack is the most critical document in a leasehold sale. If the managing agent takes six or eight weeks to produce it instead of the standard two to four weeks, the entire conveyancing timeline is pushed back. Your solicitor cannot complete the TA7 form, and the buyer's solicitor cannot begin their enquiries.
• Unanswered additional enquiries. After the initial management pack is provided, the buyer's solicitor will often raise additional questions. If the managing agent is slow to respond to these, each round of enquiries adds another one to two weeks.
• Missing documents. A management pack that arrives without key documents — such as the buildings insurance schedule, the last three years' service charge accounts, or fire safety certificates — requires follow-up requests, adding further delays.

Excessive or unreasonable fees

Management companies and freeholders set their own fees for providing information during a sale. While a typical management pack costs £200 to £500 plus VAT, some managing agents charge significantly more — in some London developments, fees of £600 to £1,000 or more are not unheard of. Additional charges may be levied for:

• Expedited pack preparation (£50 to £200 extra)
• Responding to additional enquiries (£30 to £150 per set)
• Deed of covenant preparation (£50 to £300)
• Notice of assignment or transfer fee (£50 to £250)

There is currently no statutory cap on these fees, although the Leasehold and Freehold Reform Act 2024 gives the government the power to introduce one. Until caps are in force, sellers have limited recourse beyond challenging clearly unreasonable charges through the First-tier Tribunal.

Poor building maintenance

A management company that fails to maintain the building properly creates visible problems that deter buyers during viewings and raise concerns during the conveyancing process. Common maintenance failures include:

• Dirty or poorly lit communal areas
• Broken entry systems, lifts, or communal doors
• Overflowing bin stores
• Deferred repairs to the roof, windows, or external fabric
• Poor external appearance including overgrown gardens or damaged fencing

Buyers form an impression of the building before they even enter your flat. If the communal areas suggest poor management, some buyers will withdraw without making an offer. Those who do proceed may reduce their offer to reflect the anticipated cost of future remedial works.

Financial irregularities

The buyer's solicitor will review the service charge accounts included in the management pack. Red flags that can concern buyers and their lenders include:

• Inadequate reserve fund. A low or non-existent reserve (sinking) fund suggests that future major works will require special levies, which is a financial risk for the incoming buyer.
• Unexplained expenditure. Significant sums spent without clear justification or proper Section 20 consultation can indicate mismanagement.
• Late or missing accounts. If the management company has not produced audited accounts for one or more years, this is a serious governance failure.
• High arrears across the building. If a significant proportion of leaseholders are in arrears, the building's finances may be unsustainable, leading to deferred maintenance or increasing charges.

How management problems affect your sale

The impact of management company problems on your sale depends on the nature and severity of the issues. Here is how different problems typically affect the transaction:

Complaint routes and escalation

If you are experiencing problems with your management company, there are several routes for making a complaint, depending on who manages your building and what professional bodies they belong to.

The managing agent's own complaints procedure

Start with the managing agent's internal complaints procedure. Most professional managing agents are required to have one, and it should be available on their website or on request. Put your complaint in writing, be specific about what has gone wrong and what outcome you are seeking, and keep copies of all correspondence.

ARMA (Association of Residential Managing Agents)

If your managing agent is a member of ARMA, they are required to follow the ARMA Code of Practice. ARMA operates a consumer complaints procedure that includes a mediation stage and, if the complaint is not resolved, independent adjudication. You can check membership on the ARMA website. ARMA members manage a significant proportion of leasehold properties in England and Wales.

RICS (Royal Institution of Chartered Surveyors)

Some managing agents are RICS-regulated firms. RICS has its own complaints procedure and disciplinary process. If your managing agent is RICS-regulated and has breached RICS standards, you can file a complaint through the RICS complaints process. RICS can impose sanctions including fines and removal from the register.

The Property Ombudsman

The Property Ombudsman (TPOs) handles complaints about property agents, including managing agents, who are members of its scheme. If your managing agent is a TPOs member and you have exhausted their internal complaints procedure, you can escalate your complaint to the Ombudsman. The Ombudsman can make awards of compensation and require the agent to take remedial action.

Housing Ombudsman Service

The Housing Ombudsman Service primarily covers social housing landlords and registered providers. If your freeholder is a housing association or a registered social landlord, the Housing Ombudsman may be able to investigate complaints about the management of the building. For privately owned leasehold properties with private managing agents, the Property Ombudsman is the more relevant route.

First-tier Tribunal (Property Chamber)

The First-tier Tribunal (Property Chamber) has jurisdiction over a wide range of leasehold disputes. Relevant to management company problems, the Tribunal can:

• Determine the reasonableness of service charges under Section 27A of the Landlord and Tenant Act 1985
• Appoint a manager to replace the existing managing agent under Section 24 of the Landlord and Tenant Act 1987
• Determine whether administration charges are reasonable under Schedule 11 of the Commonhold and Leasehold Reform Act 2002

Tribunal applications involve fees and take time, so this route is usually reserved for more serious or persistent problems that cannot be resolved through other channels.

Right to Manage: a longer-term solution

If the management company's problems are persistent and fundamental, the Right to Manage (RTM) offers a way for leaseholders to take control. Established under Part 2 of the Commonhold and Leasehold Reform Act 2002, the RTM allows qualifying leaseholders to take over the management of their building without needing to prove that the existing management is deficient.

How RTM works

1. Form an RTM company. The leaseholders must set up a limited company (the RTM company) with Companies House.
2. Gather support. At least 50 per cent of the qualifying tenants in the building must be members of the RTM company.
3. Serve notice. The RTM company serves a notice of claim on the freeholder and any existing managing agent. The notice specifies the date on which the RTM company intends to take over management functions.
4. Counter-notice and determination. The freeholder has one month to serve a counter-notice. If the freeholder does not agree, the matter can be referred to the First-tier Tribunal for determination.
5. Acquisition of management functions. Once the process is complete, the RTM company takes over the management functions — including the right to appoint its own managing agent.

The RTM process typically takes three to six months from start to finish. It is unlikely to be practical during an active sale, but if management problems are a recurring issue affecting property values in your building, it is worth considering as a longer-term investment before you sell.

Practical steps during your sale

While you cannot control your management company, you can take steps to minimise the impact of their shortcomings on your sale:

1. Order the management pack as early as possible. Do not wait until you have accepted an offer. Order the management pack when you first instruct your solicitor, or even before. If the managing agent is known to be slow, this gives you a head start. For tips on chasing a slow freeholder or agent, see our guide on chasing the freeholder for the management pack.
2. Pay promptly. Managing agents typically do not start preparing the pack until payment is received. Pay as soon as the invoice arrives.
3. Chase proactively in writing. If the standard turnaround passes without the pack arriving, send a polite but firm written chaser. Reference the date you paid and the expected turnaround. Keep copies of all correspondence.
4. Escalate early. If the managing agent is not responding, escalate to their complaints procedure, their professional body, or the freeholder directly. Do not wait weeks hoping the situation will resolve itself.
5. Keep your buyer informed. If delays are caused by the management company rather than by you, make sure your estate agent communicates this to the buyer. Buyers are more likely to wait if they understand the delay is being actively managed.
6. Check the pack when it arrives. Review the management pack with your solicitor to ensure it is complete. Missing documents (insurance schedule, service charge accounts, fire risk assessment) will generate further enquiries from the buyer's solicitor. It is better to request the missing items immediately than to wait for the buyer's side to identify the gaps.
7. Clear any arrears. If you have outstanding service charges or ground rent, pay them before the management pack is prepared so the LPE1 form shows a clean account. This removes a potential source of buyer concern and additional enquiries.

Sources

• Commonhold and Leasehold Reform Act 2002, Part 2 (Right to Manage) — legislation.gov.uk
• Landlord and Tenant Act 1985, Section 27A (Liability to pay service charges) — legislation.gov.uk
• Landlord and Tenant Act 1987, Section 24 (Appointment of manager by tribunal) — legislation.gov.uk
• Leasehold and Freehold Reform Act 2024 — legislation.gov.uk
• ARMA (Association of Residential Managing Agents) — arma.org.uk
• RICS (Royal Institution of Chartered Surveyors) — rics.org
• The Property Ombudsman — tpos.co.uk
• Housing Ombudsman Service — housing-ombudsman.org.uk
• LEASE (Leasehold Advisory Service / Leasehold Knowledge Partnership) — lease-advice.org
• First-tier Tribunal (Property Chamber) — gov.uk/courts-tribunals
• Law Society Conveyancing Protocol, 5th edition — lawsociety.org.uk
• UK Finance Lenders' Handbook — ukfinance.org.uk

Frequently asked questions