Calling in the block busters

You bought your freehold, thanks to several keen leaseholders who volunteered for the management company board. But, five years on, most of the directors have moved and nobody is willing to replace them. The euphoria of independence has worn off, but everything seems to be jogging along fine; why take on a job with neither pay nor perks, only aggravation and responsibility?

This scenario is not uncommon in London blocks. And, when easier enfranchisement and Right to Manage are introduced this autumn, there will be many more management companies hunting for directors. Does it matter if your company cannot muster the two directors required by law? Well, yes. Because without anyone to make decisions, the block will cease jogging along and you could even lose your freehold.

"It's something we're concerned about," says Peter Haler, of the Leasehold Advisory Service. "It's a serious problem."

David Hewett, of the Association of Residential Managing Agents, agrees. If there are no directors, there is nobody to sign accounts and annual returns for filing at Companies House: the company could eventually get struck off and forfeit the freehold to the Crown. "It costs several thousand pounds to buy it back," warns Hewett. "And it has been known for investment companies to buy freeholds from the Crown."

Apathy and busy lives are two obvious reasons for reluctance to volunteer. Residents may feel everything can be left to the managing agent. But managing agents should only report to the board, not sit on it. "We strongly recommend they don't become directors," cautions Hewett. "It's a conflict of interest."

John Dark, of DMG Property Management, has reluctantly become a director of one 24-flat Deptford block he manages so that the company has the required minimum, but he agrees with Hewett. "Although the residents trust me and they've known me for 20 years, it isn't a correct situation." His fellow director has tried to recruit a second leaseholder director, but to no avail. "Residents don't want the responsibility, they think someone else will do it," sighs Dark, who also manages two other blocks of more than 100 flats that are facing similar difficulties.

Absentee leaseholders are another problem. "People who aren't in situ aren't so involved," says Scott Keyser, director of an 1830s South Kensington block, where more than half of the 18 flats are sublet. Keyser, a business consultant, has run the block since the leaseholders bought the freehold 12 years ago and, although a succession of other directors has joined him, "they've all been sleeping partners".

He adds: "I wish they'd been more active and prepared to work with me as a team. " Although Keyser's work ranges from liaising with the managing agent to coordinating the block's refurbishment, it takes, on average, only two hours a month. "But if it was two hours a week, I'd need more directors," he says.

Directors have legal responsibilities, including approving the accounts. Gary Lees-Buckley, whose accountancy firm carries out company secretarial work for block management companies, says: "People who are not used to being directors are scared of the responsibility and they fight shy of liability."

Directors can, and should, take out liability insurance. But there are more personal reasons why leaseholders avoid getting involved.