Did you know that as a leaseholder you have the Right to Manage (RTM) your own property in tandem with the other leaseholders in your block without your landlord’s permission?
Since the introduction of the Commonhold and Leasehold Reform Act of 2002, leaseholders can take control by setting up a Right To Manage company (RTM).
An RTM company differs from a Residents’ Management Company (RMC) because the latter is set up as part of the lease from the outset. But an RTM is often set up by leaseholders where there is no RMC already in place.
In other cases, leaseholders of an RMC want to move to a RTM because of potential issues with conflict of interest a freeholder on the committee might have. A Right To Manage company separates the running of a building from the owning of the freehold.
You don’t need the landlord’s permission nor have to prove there has been any mismanagement, or seek a court order to gain a RTM. Given the right guidance it can be very productive, but it is worth remembering that anyone going down this route needs to be aware that there are many responsibilities involved.
CASE STUDY – CHARLESTON COURT, WEST MERSEA
Leaseholders at Charleston Court on the seafront in West Mersea, Essex, occupy a 1980s property containing 28 flats and for years managed their own property via their own freehold company.
It was run by well-intentioned leaseholders and representatives of the freeholder (landlord), collectively known as Charleston Court (West Mersea) Ltd (Freeholder).
The freehold company ran the property for many years, initially quite successfully. However, resident, Brian Hilton, said: “In later years it became apparent that the committee lacked a real understanding of the landlord, tenant and company laws and despite their best intentions, the decisions they were making may not have stood up under legal scrutiny.”
Fellow resident Jenny Furneaux agreed: “Things seemed to be working well and decisions were made in good faith but it became evident that the culture of ‘make do and mend’ was not good enough for an ageing building.
“With little forward planning, large remedial work looming and increasing changes in legislation for the running of flats, the directors of Charleston Court made a decision to appoint a managing agent.”
Getting the right agent to help with RTM
After a period of two years with another agent, they turned to PMS. PMS realised that the leaky roof needed much more than short-term fixes; asbestos found in common parts needed careful monitoring; a general overhaul of the 35-year-old seafront building was needed and there were not enough funds in the bank to cover them.
Liam Furr, New Business Co-ordinator at PMS, gave the freehold company some options: setting up a recognised Tenants’ Association, which was rejected as this was seen as little different to the status quo; or using the Right To Manage legislation, which would mean giving them more autonomy.
Liam said: “This powerful legislation can be used not only by frustrated tenants but by landlords, too, who want to officially pass greater control to tenants.”
Brian Hilton continued:
“We placed our trust in Liam at this point, and very quickly felt confident that we were in safe hands. Liam’s interpretation of the law and how it applied to us was particularly comforting.”
The leaseholders set up Charleston Court (West Mersea) RTM Company Ltd and engaged PMS to take them through the legal hurdles and help the new company manage the property going forward.
Brian said: “The relief we felt as directors was palpable; we seemed to finally have a robust method by which we could engage leaseholders and open up all aspects of management of Charleston Court. RTM gave us greater efficiency, better systems and above all, better transparency.
“We feel our two main issues are taken care of – we have a diligent managing agent and a competently operated legal vehicle to sustain a democratic relationship with all leaseholders.”
Liam said: “The brief was to provide a clear management plan encompassing the issue of the building’s condition and to liaise with the leaseholders, which we duly did.”
When PMS first came on board the climate among the leaseholders was one of mistrust and misunderstanding about a managing agent’s role and what they were getting for their money.
In just 12 months, PMS was able to turn this around; set up a 10-year plan; was able to collect all service charges and set about starting to resolve many of the site’s historical problems.
There were some difficult decisions for the leaseholders to make – in fact the service charge had to increase by 40 per cent to build up funds for the maintenance projects needed, but there was little backlash because of the positive business-like communication with PMS.
Another resident, Tony Millatt, said:
“Not all the problems have a quick solution, but I do feel we are heading in the right direction and that unlike the previous management company, PMS care about us.”