Management orders come in two forms: an interim management order (IMO), which lasts up to 12 months, and a final management order (FMO), which can last up to 5 years and is renewable. The IMO is typically used to immediately stabilise a property where the landlord cannot be found or refuses to act, while the FMO provides longer-term management where the landlord is unlikely to comply voluntarily.
The financial consequences of a management order can be severe. The LHA collects rent from the tenants, deducts its own management costs and the cost of any remedial works, and pays the surplus to the landlord. In practice, where significant works are required, the landlord may receive nothing and may owe the LHA for cost overruns.
When can a local authority make a management order?
The LHA can make an interim management order in the following circumstances:
- Unlicensed HMO: Where a property is an HMO that requires a licence (mandatory, additional, or selective) and no licence is in force, and the LHA considers it necessary to make an IMO to protect the health, safety, or welfare of the occupants
- Category 1 hazard — failure to comply with improvement notice: Where an improvement notice has been served and the landlord has failed to comply, and the LHA considers the IMO necessary to protect the health, safety, or welfare of occupants
- Category 1 hazard — no other enforcement available: Where the LHA cannot use other enforcement powers (e.g., the landlord cannot be found), an IMO allows it to take direct control
- Selective licensing breach: Where a property in a selective licensing area is unlicensed and the LHA considers it necessary to make an IMO
- Overcrowding: In specified circumstances where the property is overcrowded and the LHA cannot otherwise resolve the situation
Interim management order (IMO) — what happens
An interim management order transfers management from the landlord to the LHA for up to 12 months:
- Duration: Up to 12 months from the date it comes into force
- Rent collection: The LHA collects rent from the tenants and manages the property during this period. Existing tenancy agreements remain valid
- Works: The LHA can carry out works necessary to protect the occupants' safety. It can also pay the costs of works from the rents collected
- Management scheme: The LHA must create a management scheme setting out how it intends to manage the property, what works it will carry out, and how rent surplus will be allocated
- Landlord's position: The landlord retains ownership but cannot collect rent, grant new tenancies, or manage the property without the LHA's consent during the IMO period
- Appeal: The landlord can appeal an IMO to the First-tier Tribunal (Property Chamber) within 28 days of the order coming into force
Final management order (FMO) — long-term council control
A final management order can follow an IMO where the LHA determines that continued management is necessary:
- Duration: Up to 5 years. Can be renewed on expiry
- Grounds for making an FMO: Following an IMO, the LHA must either grant a licence, make an FMO, or allow the IMO to expire without further action. An FMO is made where the LHA considers it necessary for longer-term protection of occupants or where licensing is not appropriate
- Management scheme: The FMO must include a detailed management scheme. Tenants and the landlord have the right to make representations before the scheme is finalised
- Rent surplus: After deducting management costs and costs of works, any surplus must be paid to the landlord at the end of the FMO. Where costs exceed rents, the LHA can recover the deficit from the landlord
- Termination: The landlord can apply to the First-tier Tribunal to terminate an FMO if they can demonstrate they are able and willing to manage the property properly without an order
- FMOs are recorded as a local land charge and will appear in any conveyancing search, affecting the landlord's ability to sell or remortgage
Financial consequences for the landlord
Management orders can have serious financial consequences beyond loss of management control:
- Loss of rental income during the order: All rent is collected by the LHA. The landlord receives only the surplus after management costs and works are deducted. Where significant remedial works are required, the surplus may be zero for the duration of the order
- Works cost recovery: If the LHA carries out works and the costs exceed the rents collected, it can seek to recover the shortfall from the landlord. This can be registered as a local land charge, enforceable on sale
- Mortgage and insurance: Many buy-to-let mortgage and landlord insurance policies require the landlord to notify the lender or insurer of an IMO or FMO. Failure to notify may be a breach of policy conditions. Some lenders may call in the mortgage
- Property value: A property subject to an active FMO is effectively unmarketable for normal sale — the order must be disclosed and it significantly depresses value
- The total financial exposure from an FMO can exceed the value of the property in extreme cases where major works are required
How to avoid a management order
Management orders are avoidable with proactive compliance:
- Maintain HMO licences: Ensure all required HMO licences (mandatory, additional, selective) are obtained before letting and are renewed on expiry. The LHA will not make an IMO for an unlicensed HMO if a licence is in force
- Comply promptly with improvement notices: Responding to HHSRS enforcement within the specified timescale is the single most important way to avoid escalation to an IMO. Where compliance within the deadline is difficult, engage with the LHA proactively and request a time extension
- Maintain contact with the LHA: Many IMOs are made because the landlord cannot be contacted. Keeping the LHA informed of your contact details and managing agent details avoids emergency action in your absence
- Carry out proactive maintenance: Regular property inspections and planned maintenance reduce the likelihood of Category 1 hazards developing
- Use a professional managing agent: A reputable ARLA-licensed managing agent will typically maintain regulatory compliance and respond to enforcement notices on the landlord's behalf
Frequently asked questions
How long does a management order last?+
An interim management order (IMO) lasts up to 12 months. A final management order (FMO) lasts up to 5 years and can be renewed. In practice, the LHA will usually try to resolve the situation (by granting a licence or securing voluntary compliance) before making an FMO. The landlord can apply to the First-tier Tribunal to terminate an FMO if they can demonstrate they are able and willing to manage the property properly.
Does the landlord still own the property during a management order?+
Yes. A management order does not transfer ownership — the landlord retains legal title throughout. However, the LHA takes over all management functions: collecting rent, managing tenants, authorising works, and dealing with the local authority. The landlord cannot collect rent, grant new tenancies, or carry out works without the LHA's consent while the order is in force.
Can I appeal a management order?+
Yes. You can appeal an interim management order to the First-tier Tribunal (Property Chamber) within 28 days of it coming into force. You can also appeal a final management order at the same Tribunal. The Tribunal can confirm, vary, or revoke the order. If you want to terminate an FMO before its expiry, you can apply to the Tribunal at any time — but you must demonstrate you are able and willing to manage the property without an order.
What happens to my tenants during a management order?+
Existing tenancy agreements remain valid during a management order. The tenants continue to live in the property and continue to pay rent — but they pay it to the LHA rather than the landlord. The LHA cannot evict the tenants during the order (except through the normal court process on valid grounds). When the order expires, management reverts to the landlord and tenants resume paying rent to the landlord.