Right to Manage and why it could work for you

Right to Manage (RTM) is a process that enables leaseholders of flats/apartments to take over the management of their building.

The right applies to leaseholders of a building or part of a building containing at least two flats. At least two-thirds of the flats in the building must be owned by long leaseholders (a lease of at least 21 years) and at least half of the flats in the building must take part.

The building will not qualify for Right to Manage if any non-residential areas (e.g. shops), make up more than 25% of the whole floor area of the building. Also, the building may not qualify if there are four or fewer flats and there is a resident landlord.

Participating leaseholders must set up a RTM company using prescribed Articles of Association. A notice inviting participation must be served on all leaseholders who are not members, or who have not agreed to become members.

A notice of claim for RTM will then be the served on the freeholder to begin the formal claim. This is a technical notice and should be drawn up by a qualified professional.  Errors can lead to invalidity and unexpected costs being incurred.

The freeholder is able to challenge RTM by a counter-notice within one month. If they do, the RTM company can apply to the First-tier tribunal (Property Chamber) for a ruling as to whether they have the Right to Manage.

If the freeholder does not challenge, the RTM company acquires Right to manage four months from the date of the notice of claim which is “the acquisition date”. The freeholder should notify the RTM company of existing contractors and also notify those contractors of the takeover by the RTM company.

The RTM company does not have to keep on the freeholders existing contractors, e.g managing agents. They can employ their own agents, or manage the building themselves. The RTM company takes on all management functions under the lease, although the freeholder has to be kept informed on such matters as consents e.g to alterations or letting. The RTM company has the power to enforce obligations under the lease, but not to use the forfeiture procedure.

The freeholder is also entitled to apply to be a member of the RTM company after the acquisition date.

What are the benefits of Right to Manage?

The main benefit of RTM is that you gain greater control over the costs of running the building. You may also save money, since you do not have to pay for the services of a property management company if you prefer to self-manage.

Additionally, by forming a RTM company you can choose and change contractors whenever you like. If you are not satisfied with their work, you can simply stop using their services and look for another company.

Another benefit is that any decisions on works can be made and carried out more quickly. A property management company usually manages lots of different buildings; you and the other RTM company members only need to concentrate on your building.

Does the Freeholder have to agree to leaseholders’ Right to Manage?

The Freeholder does not have to consent to the leaseholders activating their right to manage. As a leaseholder, you can claim your right to manage without having to prove that the management of the building was badly handled.

Usually, all you will need to do is to notify the building owner of the RTM claim using the procedure summarised above. However, the Freeholder does have the right to be a member of that company.

What are my responsibilities as part of a Right to Manage company?

If you are successful in setting up a RTM company, you and your fellow leaseholders are now responsible for managing the building. This means that you now have to do everything that the property management company did (or should have been doing in accordance with your lease). Mostly, this means insuring the building, organising contractors to carry out all necessary repairs, cleaning and any major works that need doing.

Your other main responsibility will be to meet with the other RTM company members to vote on issues. Most decisions will be about choosing suitable contractors for necessary works.

Is Right to Manage a good idea?

Right to Manage is a good idea if you are unhappy with your building’s current management and think you can do better or would generally would like greater control over your building. The process of creating a RTM company is fairly straightforward, and running one successfully can save you money.

Right to Manage will definitely give you much more control over how your building is managed. However, this does come at a cost – namely your own time and energy. You will need to decide whether you, and your fellow leaseholders, are willing to take on the administrative burden of the whole building.

If you have a good relationship with your neighbours, RTM can make a positive difference. While you have to put in some of your own time, the benefits can quickly make it worthwhile.

At Martin Tolhurst Solicitors we have experience in RTM scenarios from straightforward supported RTM right through to complex defended cases. Please contact us on 01634 728111 to discuss any Right to Manage questions you may have.