Who is Who in a Block of Leasehold Flats?

When purchasing a Leasehold flat there can be some confusion as to ‘who is who’ this guide sets out the key persons in Leasehold and what their title means…

Freeholder – owns the land on which the building(s) is built. May also be the landlord. The freeholder is sometimes referred to as having a “reversionary interest”. This just means the freeholder has the right to take possession of the property on expiry of the lease term.
Landlord – either owns the building (as freeholder), has a long lease on it or is a 3rd party under the lease with obligations to manage the building and provide the services under the service charge. The 3rd party is most commonly a Residents’ Management Company.

Head Lessor – the landlord may grant a lease of the whole building to a party (company or individual) who then grants ‘under leases’ to the leaseholders of individual flats. In this scenario, the Head Lessor becomes the landlord of the individual flats.
Freehold Company – a company that owns the freehold, the shares in which are usually owned by the leaseholders. Often described as ‘having a share of the freehold’.

Residents’ Management Company (RMC) – a company set up to deliver the services on behalf of the landlord under the terms of the lease. The company is a party to the lease (as landlord) and all leaseholders are usually shareholders.

Right to Manage Company (RTM Co) – Right to Manage(RTM) is a group right for qualifying leaseholders of flats to manage their own building in which they live through a special company set up by the leaseholders for that acquisition.

Leaseholder – the person who has bought a lease which gives them the right to occupy the flat for a fixed number of years (“the term”), usually well in excess of 21 years and often as long as 999 years when originally granted. Can also be called ‘lessee’, ‘flat owner’, but usually referred to as ‘tenant’ in legislation.

Residents’ Association – a formation rather than a party to the lease and therefore will not be shown in the document. A residents’ association (which is an informal representative body of flat owners and sometimes tenants) is different from a RMC (which is a formal, legal person) even though the body of its membership may be similar or identical.

Managing Agent – a company appointed by the landlord to run and manage the building and any services. They will collect service charges from leaseholders in accordance with the terms of the lease. The service charges will include “Management Fees”, which are their fees for this service. This is usually only a very small element of the total service charge. The client of the Managing Agent is either the Freeholder, the landlord, the RMC etc.

Property Manager – the person who actually manages the building, usually an employee of the Managing Agent. On site staff/caretaker/porter/concierge/estate operatives – the staff who work on the development (usually bigger buildings/estates) to help with the day to day running. They report to the Managing Agent.

Tenant – if the leaseholder sub-lets their flat on a short-term tenancy (usually on an assured shorthold tenancy), the occupier is referred to as a tenant. Their tenancy agreement is for a minimum of 6 months but can be for several years. Some leases do not allow sub-letting.

Neil Newstead, FARLA MNAEA
Chief Executive Officer

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