Exercising the right to manage and taking control of the management of your own block of flats is likely to save you and your fellow tenants some money. But it’s not without its pitfalls and responsibilities. Before rushing into forming an RTM Company, make sure that you understand what you are taking on.
Thinking about exercising your Right To Manage? Call our specialist solicitors on FREEPHONE 0800 1404544 for no strings attached FREE initial phone advice.
Why would I want to take on the right to manage?
You may want to take on the right to manage if you believe that your landlord or the management company currently in charge of your building, is not doing a good or efficient job of the upkeep of your building. You may also feel that you are overpaying on maintenance charges. Not only this, but in order to increase the value on your flat, your building may need development, which is something that your landlord or his/her management company is not offering you.
Exercising your rights to manage is not something that you can take on single handed. It involves the support of at least 50% qualifying tenants in your building. Therefore it will not just be you who is taking on the right to manage; instead you and your fellow tenants will create a right to manage company. This company will then look after the building and its upkeep.
Are there any disadvantages to exercising my right to manage?
Yes, the down side to Right To Manage Company formation include :
• At least one tenant must act as a director to the company, which incurs addition liabilities such as being responsible to the members of the company.
• Budgets and cash flow must be monitored and when tenants do not pay up, it is not the landlord’s responsibility to collect payment, it is the company’s.
• It may be difficult to please all tenants. Some may be for development and some may be against, this can inadvertently create conflict and blame may be laid at the director’s door.
Not every tenant will join as a member of the right to manage company, yet those who do not join will still benefit from the fruits of your labour.
• The present landlord is entitled to join the company as a member and may therefore be entitled to vote on what action is taken (depending on the set up of the company).
The Criteria
In order to exercise your rights to manage the following criteria must be satisfied:
- You must reside in a self-contained block of flats.
- The landlord must not be charitable housing and the lease must not be a business lease.
- The building must be at least 75% residential use.
- You must ‘qualify’ for the right, i.e. you must be the owner of a long lease (more than 21 years).
- 2/3 of the building must be let to other ‘qualifying’ tenants.
- 50% of the qualifying tenants in the building must want to exercise the right to manage and must become members of the right to manage company.
How long will it take to exercise the right to manage?
Once your UK RTM company is created, you must allow 14 days in order to inform the non-involved tenants of its existence and offer them membership. Once this is done you can then serve notice upon your landlord. You must give your freeholder 28 days in order to respond to the notice and where applicable issue a counter-notice. Under statute you can only officially commence the takeover of the right to manage company 3 months after this 28 day period.
Rights to manage – am I eligible?
The Commonhold and Leasehold Reform Act 2002 awards qualifying leaseholders the statutory rights to manage their building without having to buy the freehold. These rights to manage enables a tenant to remove the management control of the building from the landlord and create a “right to manage company” [also known as an RTM company]. In many cases the landlord will have appointed their own independent management company. The rights to manage exercise works in the same way in this situation as it removes the control from the management company as opposed to the landlord.
A desire to exercise a right to manage can arise when a tenant becomes frustrated by the level of care put in to the maintenance of their building or the level of charges they have to pay for maintenance. However it is not a pre-requisite to claiming the right to manage that the landlord must have either acted negligently or that the tenant is not happy with the maintenance charges.
For advice from exercising your rights to manage, talk to us first
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