[ta1243]

If you have a leasehold flat you have a right to manage

https://www.gov.uk/right-to-manage-a-guide-for-landlords

Nothing to do with the freehold

If I own a lease and then rent it out on an AST I want to reduce my costs to increase my profits. If I can manage the block myself for £4k and an annual vote for a director, or let the freeholder manage it for £8k, then clearly I'll do the former.

Same incentive as if you are an owner-occupier leaseholder.

[denotational]

I misread your original comment, but I don’t think replacing the management company is any easier than purchasing the freehold, aside from capital considerations.

The right exists in principle, but 50% of flats (as I understand it, all of them, including flats that are not demised under lease, but under AST from the freeholder, and who do not form part of the quota) must agree to form a management company before it can take effect.

> If I own a lease and then rent it out on an AST I want to reduce my costs to increase my profits.

In a demand-skewed market you will just pass the higher cost on in rent; it’s not going to make it any less likely that you manage to let it out.

Furthermore, even contacting the owners of sublet flats, let alone convincing them they should spend money and endure potential disruption, can be difficult, making it hard to reach the threshold.

In a small block it might be easy, in a high-rise with 200 apartments, it’s trickier.

[ta1243]

> In a demand-skewed market you will just pass the higher cost on in rent; it’s not going to make it any less likely that you manage to let it out.

In a demand skewed market you'll charge the same regardless.

Two people owning identical flats, one with a 90% mortgage at 5%, one with no mortgage at all, will charge exactly the same rent.

Costs don't come into the rent charged, this is a lie perpetrated by landlords who want tax breaks.

[denotational]

> Two people owning identical flats, one with a 90% mortgage at 5%, one with no mortgage at all, will charge exactly the same rent.

Identical flats in the same building will have the same management charge.

Flats in different buildings are not identical, and will generally have different rents; the difference in management charge is one factor that will determine this.

[ta1243]

No they won't have different rents, if they are identical then they can charge the same amount. The costs (service charge, mortgage, etc) doesn't come into it.

Think about it - if I'm a landlord and have a lower service charge why would I charge less? That just reduces my revenue.

If I am a tenant and see one charging more than another why would I pay for the more expensive one?