Right to Manage (RTM) allows leaseholders to take over management of their block of flats.
The Commonhold and Leasehold Reform Act 2002 introduced a right for leaseholders to force the transfer of the landlord’s management functions to a special company set up by them – the Right to Manage company.
It was introduced to empower leaseholders, who generally hold the majority of value in the property, to take over management responsibility from the Freeholder without having to prove any fault on the Freeholder’s part.
For those interested in obtaining RTM status, our Property Management team have highlighted seven things you need to consider:
Does my block qualify for RTM?
A block will qualify for RTM status if:
- No more than 25% of the floorspace is used for non-residential purposes (e.g. commercial units, live to work units or offices).
- The block itself needs to be self-contained, meaning that the development cannot have detached separate blocks or consist of more than one self-contained premises (if in doubt it is a good idea to instruct an independent surveyor to ascertain floor spaces).
- There needs to be a minimum of 25 years left on the leases at the block.
- At least 50% of qualifying tenants in each development need to officially confirm their intention to be part of the RTM.
What will it cost?
Each participant in an RTM is expected to pay their equal share of ‘Landlord’s reasonable costs’ for considering the RTM; RTM legislation defines this as costs associated with the Landlord engaging a solicitor to ensure that the RTM claim is valid and has been correctly executed. If you engage a property management agent such as PMS to guide you through the process, they will also charge a fee.
PMS’s fee, charged to leaseholders if the RTM is successfully executed, depends on the type of building, the number of self-contained premises, and the amount of flats in each one of these premises. We are happy to offer a fixed fee for RTM, contact our office for details.
What will we achieve with RTM?
If you successfully exercise the Right To Manage, it will open up a far greater degree of control and choice; you can choose who maintains and manages your block and for how much, and you can directly control service charge levels and funding.
Will the landlord agree?
Probably not! The Landlord will be losing management control of the block he/she owns along with the right to source insurance-related products (for which some landlords charge a premium). Most RTM Claim Notices are rejected by the landlord, sometimes for spurious reasons in an attempt to derail the RTM.
The landlord is entitled to reject the claim notice, however, there would have to be a valid reason e.g. the block may not qualify for RTM or the Claim Notice has been executed incorrectly. If the Landlord does reject the notice for whatever reason, the case can be referred to the First Tier Tribunal (FTT) for a determination that the RTM claim was valid and RTM management can commence.
What responsibilities will we be taking on?
The RTM takeover would transfer all management functions that are placed on the landlord in accordance with the lease over to the RTM company. Simply put, the leases will not change; the RTM Company will be under an obligation to manage the block strictly in accordance with the leases in place.
Will we manage the block ourselves or employ the same/different managing agents?
A group of leaseholders can undertake the RTM process and go on to self-manage the property by themselves. However, an agent will usually guide a set of leaseholders through an RTM takeover on the agreement that the agent will be awarded the management contract if successful. PMS is happy to guide leaseholders on this basis.
Can PMS help with the RTM process?
PMS can assist – we have a 100% success rate with RTMs that we have executed. Not all buildings qualify for RTM, so it is important to engage professionals from the outset so you are not exposed to any unnecessary costs if the RTM fails due to poor planning and preliminary execution.
For guidance about exercising your Right to Manage and establishing an RTM company for your block of flats, contact us today 01206 835350 or drop us an email to get the process started email@example.com