13 May 2016 by Leah Veasey

The Right to Manage (RTM)

If you are a leaseholder and unhappy with your landlord or managing agents, over high service charges or because your building is in disrepair, you may be able to resolve these problems, and take control of the management of your building, by setting up a Right to Manage Company pursuant to the Commonhold and Leasehold Reform Act 2002.

How does it work?

Firstly, your building has to qualify. It must be a self-contained whole or part of a building (and that part must be structurally detached), and it must contain at least 2 flats, of which at least two-thirds must be held by qualifying long leaseholders. The building can be part commercial, however that part of the building must not exceed 25% of the total floor area of the building.

A qualifying long leaseholder is one whose lease was originally granted for a term longer than 21 years. They do not need to be resident to qualify, and their flat can be rented out. In order to commence the RTM process, at least 50% of the leaseholders must participate. You and your fellow participating leaseholders will then need to set up a special RTM company which is the vehicle that takes on the responsibility for managing the building. Once the RTM company has been formed, the participating leaseholders must formally invite all of the other leaseholders to join in the process.

Once the leaseholders have agreed who is, and is not, participating, a formal Notice of Claim is then served on the landlord, on behalf of the RTM company, giving the landlord one month to respond. If the landlord does not contest the leaseholders’ RTM claim, once the landlord consents to the RTM, the leaseholders will have around 3 months to prepare to take over the management of their building, ahead of a nominated acquisition date when the management functions will then formally pass from the landlord to the RTM company.

Taking Over

The RTM process is very flexible in that, once the right to manage has been acquired, leaseholders are free to take decisions on how to manage their building. Leaseholders can either choose to self-manage or, alternatively, appoint a professional managing agent to manage their building. The effect of the RTM process is that it brings to an end all existing contracts, so leaseholders are able to start afresh with new contractors if they were unhappy with any of the existing contractors.

How Can We Help?

We regularly act for both landlords and leaseholders on RTM claims. In straightforward RTM claims, where there is no dispute between the parties, our involvement is usually limited to serving the required statutory notices, at each stage of the process, and assisting the leaseholders with the handover process.

However, RTM claims are easy to get wrong (both for landlords and leaseholders) if you are acting without professional advice and representation. The RTM process effectively takes away a lot of the landlord’s rights under the leases, so if leaseholders do get it wrong, it is no surprise that well-advised landlords will seek to challenge RTM claims.

When acting for leaseholders, we can assist if their RTM claim is challenged, and ideally minimise the risk of any problems in the first place. For landlords, we are able to advise on whether there is any scope to challenge an RTM claim.

Once the RTM has been acquired, we also have a wealth of contacts in the property management industry that our leaseholder clients will have access to, should they decide to engage an alternative managing agent.

For further information on the Right to Manage, please contact Leah Veasey on 0207 288 4708 or email her at leahveasey@boltburdon.co.uk

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