Right to Manage
If leaseholders of residential property are not happy with the management of their block of flats then it is open to them to form a ‘Right to Manage Company’ and make an application to the Leasehold Valuation Tribunal for the appointment of such Right to Manage Company (“RTM”). Careful consideration must be given to this and suitable legal advice obtained.
Some initial points to be considered:-
- The right to manage is only available to leaseholders of flats and not houses
- What do you want to achieve by taking over the management?
- The right to manage will not mean self-management – managing agents will still be required in most cases
- The service charge will still need to be set at a realistic level
- Who will act as the officers of the RTM (e.g. Directors, Company Secretary)?
Right to Manage Requirements
The right to manage is not available to all, certain requirements must be met to qualify, including:
- The building must be self-contained
- It must contain at least two flats
- At least two thirds of the flats must be let to ‘qualifying tenants’ (i.e. their lease was originally granted for more than 21 years)
- The right can only be exercised by an RTM and the members of such company must comprise a sufficient number of qualifying tenants (i.e. equal to at least half the total number of flats in the building)
The procedure (which can only be exercised by the RTM and not individual leaseholders) is laid down by statute and includes:
- Once the RTM is registered as a company with its original members it must invite all other leaseholders in the block to join
- The RTM can, upon notice, obtain management information from the Landlord
- A suitable service charge budget will need to be prepared by the RTM (ideally with the help of a managing agent)
Some points to note:
- The RTM is required to reimburse the costs incurred by the Landlord in the right to manage process
- The Landlord is entitled to become a member of the RTM
- Once it takes over the management the RTM has full responsibility for management functions and responsibilities
- If the building contains non-residential or commercial units the management of these parts will remain the responsibility of the Landlord
- The Landlord will still be responsible for performing the Landlord’s covenants contained in the leases (excluding management)
- Monies due to the Landlord prior to the takeover remain payable to the Landlord
- The RTM has a statutory duty to ensure that all leaseholders observe their lease covenants and to take action if they do not. Any breaches not remedied must be reported to the Landlord
Please call us if you would like more information, or complete an Enquiry Form.