Management structure for your property

Dealing with property management always seems to get more and more complicated, with new acronyms and more roles coming into play. But if we go back to basics, what entities are involved in managing a block or estate?

Tripartite lease

The setup for most leasehold developments will include 3 separate parties with distinct roles. This is typically the freeholder, management company, leaseholder.

Freeholder

This is the person, or more likely a company, that owns the land and apartment building. This can be the developer that originally built the property, or an investor that subsequently purchased the freehold. Most investors acquired freeholds due to the historic income earned from Ground Rents, though after the Leasehold Reform Act 2022 this no longer applies to new leases. It is worth noting that the current freeholder might not be the same as the one shown in your lease, if the original freeholder has since sold the freehold asset.

Management Company

The Residents Management Company (RMC) isn't always included in the lease, but can be the third party in a tripartite setup. This RMC is responsible for day-to-day management and maintenance, and collecting funds from the owners to pay for the property. In most cases the individual owners will be members or shareholders of the RMC, or it might simply be the freeholder or an independent company.

Leaseholder

The leaseholder, or owner, of an individual flat is the person most people consider to own the property. They are granted a long lease, usually hundreds of years, with exclusive rights and ownership of the apartment.

Head lease and sub lease

In simple cases you will have a leasehold flat, and the freeholder of the building. It can be more complicated though, for example when an apartment building within a larger complex is leased to a company, which then grants a lease for each flat to a leaseholder. This is known as a head lease, between the freeholder and head lessee. That head lessee can then grant leases within the building to sub-lessees; this follows the same tripartite structure noted above, albeit the lessor is not the freeholder / landowner.

Because of the setup, there can be many different leases in the chain with 4, 5, 6 or more leases and sub-leases. As you move back up the chain, each lessor is responsible for more and more of the estate.

It is useful for the leaseholder to understand the overview of these arrangements when they first buy in, so that they are aware who is responsible for which parts of the estate and who to report specific issues to.

Developer and freeholder

Some properties, such as new builds, will often have the same entity as developer and freeholder. However sometimes there will be a separate company working as the developer, with the freehold interest owned by another party. In these cases, there can be some disputes between different parties about potential snagging issues, or construction problems, if the workmanship isn't up to standard. Normally the developer is in charge of construction work and structural issues, particularly in the first 2-10 years, while the freeholder takes overall responsible when the warranty period expires.

As a leaseholder, it is important to understand which party is responsible for what work and any relevant guarantees. This should be detailed in your contract at the point of purchase, and with any accompanying paperwork.

Right To Manage

If your property does not have a tripartite lease, then you will only have the freeholder and leaseholder. The Right To Manage (RTM) legislation provides for leaseholders to setup an RTM, which is similar to an RMC and gives management responsibility to the leaseholders. This allows the flat owners to take charge of the property, including repairs, maintenance contracts and service charges.

Managing agents

A managing agent like LovePM is normally appointed by the RMC (or RTM). It is also possible for freeholders to appoint their own agent, particularly for things like collecting Ground Rent or if they are responsible for arranging buildings insurance. You may also find different agents on the same estate, for example if an RTM takes over one of the buildings within an estate. It is essential for the leaseholder to know which agent acts for which entity, so that they can understand which party will arrange repairs and services for which areas.

The agent is appointed on behalf of the freeholder or RMC to carry out tasks and administration on their behalf, but they cannot replace the RMC in terms of responsibility or decision making. As such, you may find some delays with different jobs, especially when multiple agents are involved, given that they will have to seek instruction and approval from their client at each step.

Under-tenant

The final part to be aware of is usually a under-tenant. For a standard leasehold flat, an under-tenant will be the renter, or the person that most people see as a typical tenant. The main difference between an under-tenant and leaseholder is that a leaseholder has a long lease, usually 21+ years. An under-tenant will have a short lease, which used to be an Assured Shorthold Tenancy (AST) but all such tenancies transferred to Assured Periodic Tenancies following the Renters Rights Act 2025. It is important to remember that the leaseholder is responsible for the clauses within their lease, and ensuring that their under-tenant is aware of and complies with those clauses as well.

If you have any queries about the management structure for your estate, or how each party should interact with each other, you can contact our team to find more and for advice on who should assist with specific issues.