Right to Manage

Are you fed up with your freeholder or managing agent charging excessively for insurance, administration fees, repairs or other services ? We can put a stop to these problems by forming a Right to Manage Company, which will allow you to manage your property economically and effectively. You will be able to organise your own insurance, carry out your own repairs and have no direct contact with the landlord over the management and running of your property.

We have assisted many flat owners to achieve this goal. Whilst the legislative provisions are fairly complex, we can deal with each step to ensure you will free yourself of the current landlord’s unprincipled management. Even if you are fortunate enough to have a good landlord, you can still take control of the property’s management since there is no legal requirement to find fault with the existing arrangements.

Please read through the following notes for a detailed description of the Right to Manage process. If you would prefer please call us on 01702 562072 for an overview of this information and for a quotation. Alternatively, you can email here.

By far and away the the most significant reason for wanting to form an RTM Company is to enable you to arrange your own repairs, maintenance, building insurance and not be liable for any of the landlord’s management or administration fees.  Once the RTM Company takes control, most lessees in small blocks will arrange their own management, although if you so wish, there is nothing to stop you appointing an agent to act on your behalf.  In brief any previous involvement the landlord has had with the property will cease, although that they will of course, still be entitled to receive the ground rent payable under the terms of the lease.

The process starts by us assessing the eligibility of the building and the number of qualifying tenants.  There are a few requirements, which must be satisfied.  These are:

1. The building must be self-contained.

2. There must be a minimum of two flats.

3.  At least two-thirds of the flats within the property, must be let to “Qualifying Tenants.” Nearly all lessees will be “qualifying tenants” as this simply refers to the length of the tenant’s lease, which must have been for a term of at least 21 years, when originally granted.

4. The building may contain a commercial element, but this must not exceed 25% of the total floorspace.

In order to exercise the “Right to Manage” at least 50% of the total tenants within a building, must be willing to become members of the RTM Company.   It is also worth mentioning that the “Right to Manage” applies in respect of a single building.  Therefore, in the case of a larger development, independent applications are required in connection with each building.

In the first instance it is necessary to form a RTM Company.  Whilst it would be useful at the outset to know exactly who is willing to become a member of the Company, the formation of the RTM Company can be completed with a minimum of two people.  Following incorporation of the RTM Company, we will need to commence the procedural elements. The first of these requires us to serve a Notice Inviting Participation.

The Notice Inviting Participation, must be served on all qualifying leaseholders, who have not become a member of the newly formed RTM Company. The Notice must be served in the prescribed format, and contain various mandatory statements and enclosures, specified under the legislation.   A failure to correctly serve the Notice can invalidate the claim.  Depending upon the size of the property it may subsequent to the Notice Inviting Participation, be necessary to serve a Section 82 Notice, under the Commonhold and Leasehold Reform Act 2002.  This Notice is served where additional information is required from the landlord, in order to move on to the next stage, which involves serving a formal Notice of Claim.

As with the Notice Inviting Participation, the formal Notice of Claim can only be served in the prescribed format. The law requires a minimum of 14 days to elapse between the serving of the Notice Inviting Participation and the service of the Notice of Claim. Similar to the procedures required when serving a Notice Inviting Participation, there are various mandatory statements and enclosures, which must accompany the Notice of Claim.  The Notice, must allow a minimum period of one-month, for the landlord to respond with a Counter-Notice.  The Notice must further specify a date at least three months after the date specified for the Counter-Notice, on which the RTM Company intends to acquire the “Right to Manage” the premises.

After service of the Notice of Claim, it may be necessary to issue a further statutory Notice (Section 83), if there is any part of the property, which is only accessible to the landlord, or the agents.  Typically this will apply to bigger blocks, where access is needed to such areas as communal boiler rooms, water tanks,  roof spaces etc.  The Section 83 Notice places a legal obligation on the landlord to allow access to such previously restricted areas, by giving not less than ten days notice.

As stated above, the landlord is obliged to serve a Counter-Notice by the date specified in the Notice of Claim. The Counter-Notice must either admit that the RTM Company is entitled to exercise the “Right to Manage” or alternatively it can allege that the RTM Company has no such entitlement.  If it were to do this, it must explain why such entitlement does not exist.  There are very limited possibilities for the landlord to contest the “Right to Manage” application.  These are limited to proving that the building itself does not qualify, that in some way the RTM Company is not compliant with the legislative requirements, or there are insufficient members of the RTM Company to represent 50% of the tenants within the building.  We will ensure that all of these requirements are met, giving the landlord no possibility of evading your application.  In the unlikely event that the landlord contests the right of the RTM Company, it will be necessary to make an application to the Leasehold Valuation Tribunal, within two months of the date of the landlord’s Counter-Notice. The LVT will determine whether or not the RTM Company are entitled to exercise a “Right to Manage.”

If the landlord admits (through the Counter-Notice) the RTM Company are entitled to exercise a “Right to Manage”; the management will pass to the RTM Company on the date specified in the Notice of Claim. Equally if the landlord does not serve a valid Counter-Notice, the management will also pass to the RTM Company on the date specified in the Notice of Claim.

In respect of larger blocks and indeed smaller conversions in some cases, the legislation provides for the serving of Contractor Notices.  These are issued to contractors who supply services to the landlord.  The Contractor Notice must inform the contractor that the “Right to Manage” is to be acquired by the RTM Company and state the date that the “Right to Manage” will come into being.  The Contractor Notice must further state that if the contractor wishes to continue providing services to the building, it must contact the RTM Company to seek further instructions.   In conjunction with the Contractor Notices, the landlord must also serve Contract Notices on the RTM Company, advising the Company of the existence of any contract and state that the RTM Company should contact those contractors it may wish to retain, to provide services.

There is also a duty on the landlord to provide the RTM Company with any information necessary, to ensure the proper and efficient management of the property. Such information may include the examination of service charge accounts, specifications of work, either ongoing, or planned for the future, to name but a few.  The legislation provides that the Notice may be served upon the landlord at anytime, but the landlord is only obliged to provide the information required within 28 days of service of the Notice. Furthermore the landlord cannot be compelled to do so before the acquisition date; i.e. the date that the “Right to Manage” comes into existence.

With regard to any service charge monies, which have been collected in advance and have not been accounted for, the landlord is under an obligation to hand back all unspent monies to the RTM Company. In the event of a dispute, the legislation, gives the opportunity for either party to make an application to the Leasehold Valuation Tribunal, to determine how much should be passed back to the RTM Company.

As stated above the “acquisition date” is the date that the RTM Company will commence all the normal management functions, previously undertaken by the landlord directly, or there agents.  It is important to remember that the provisions and responsibilities outlined in the respective leases, will continue in existence and it is the function of the RTM Company to ensure that such responsibilities are complied with. Where a breach of the lease terms occurs the RTM Company must seek its remedy and ultimately in the event that the breach is not remedied, report the issue to the landlord, who may instigate forfeiture action at its discretion.

Typical responsibilities of an RTM Company include.

  1. Arranging building insurance.  There will be an obligation to ensure that adequate cover is obtained and that the premium is paid.
  2. Repair and maintenance of the premises.
  3. Provision of services, such as gardening, cleaning etc.
  4. Collection of service charges (if required)
  5. Compliance with statutory requirements.
  6. The granting of approvals required under the terms of the leases and enforcement of the lease covenants where necessary.

Contact Mike Stapleton & Co.

For a free informal chat about your lease extension or any other matter call Mike Stapleton FRICS on 0207 125 0499 or feel free to fill in the form below and we will get back to you as soon as possible.