The process of Right to Manage (RTM) was introduced through the Commonhold and Leasehold Reform Act in 2002 and gives leaseholders the statutory right to take over the management of their property from their landlord by setting up a right to manage company.
How do you do get the ball rolling with a Right to Manage?
If you are looking at your options and exploring the possibility of Right to Manage but are unsure whether this is the right option for you, one of Wishtower’s senior management team would be more than willing to have an initial discussion with you to offer our opinion on whether this is the most appropriate route.
During the initial discussion, we would be able to assess where you are in the process. If the formal process has already started, we would be able to assist in making sure everything is in place and all relevant information has been provided by the Landlord, once the handover to the RTM is finalised. If the formal process hasn’t commenced, we would be able to check the building and the leaseholders meet the qualifying criteria as well as discussing what happens next.
The actual process is relatively simple, but the qualifying criteria and rules can be complex. The landlord’s consent is not required, nor is any order of court and leaseholders do not need to prove mismanagement. The right is simply exercised by the serving of a formal notice on the landlord as well as notices inviting participation to all leaseholders, both of which must be done in a prescribed form. After a set period of time and assuming all of the qualifying criteria and notice periods have been met, the management transfers to the right to manage (RTM) company.
Who qualifies for Right to Manage?
The 2002 Act set out some specific criteria which must be met for the property to qualify for a Right to Manage (RTM). These are:
- The building must be an apartment block and at least two thirds of the dwellings must have been sold on a long leases of 21 years or more;
- A building must contain no less than two flats (there is no maximum);
- A building must contain no more than 25% of commercial dwellings (e.g. retail / office etc)
Should your property meet all of the above criteria, then a claim must also have at least 50% of the flats within a building agreeing to be members of the Right to Manage company. Whilst a claim only needs 50%, the more leaseholders agreeing to enter into the process the better.
Why enter into a Right to Manage?
Most clients Wishtower engages with on this is because they have become despondent with the condition of the property. Despite, in their view, paying a large amount of money via service charges they feel their property could be managed more effectively if they had some say / control on who managed the property.
However, the right was introduced, not just as a means of wrestling control from bad landlords, or managing agents, but also to offer the leaseholders a sense of empowerment. It is generally the leaseholders who hold the majority of the value in the property. It is generally the leaseholders that care about the property. It is therefore generally the leaseholders who wish to take on the responsibility for the management.
One of the advantages of the Right to Manage process is you can take over certain management responsibilities from the landlord without having to prove bad management.
Whilst it clearly makes sense for leaseholders to want to take control back from the landlord, leaseholders need to appreciate that by doing so brings with it duties and liabilities. In acquiring the power to make approvals and to enforce the covenants of the leases, the leaseholders become wholly responsible for all decision making with the overall function of the building.
However, setting up an RTM does not necessarily mean self-management. Wishtower manages a lot of buildings on behalf of RTMs, following the RTM company’s decision to delegate the management function to us as a managing agent. Wishtower works closely with RTM Directors and leaseholders to provide a sense of empowerment and involvement in the management of their building.
This update is provided free of charge for information purposes only: it does not constitute legal advice and should not be relied upon as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Wishtower or by Wishtower as a whole.