Right to Manage Services

Right to Manage (RTM) is the process that effectively places all the responsibility for the management and maintenance of the building into the hands of the flat owners. 

Whether you have only 2 flats involved in seeking Right to Manage, and you want to know how to form your own Residents Management Company, or you are already a member of a Residents Management Company and you’re unhappy with your existing management arrangement, we have the expertise to support you.

Property Management Agent

At Scanlan's we have over 25 years in property management and can help you with the management of the building. From a dedicated property manager to a top-class support team you will have everything you need to effectively take over the management of your building and ensure its up keep.

What Is A Right To Manage Company?

Many years ago, The Commonhold and Leasehold Reform Act 2002 was introduced, contained in this was the introduction of the Right to Manage (RTM). This gave leaseholders statutory rights to take control of the management of their property from the landlord. To use these rights however they need to set up a special company - a right to manage company. The RTM company can then manage the building directly or pay a managing agent to do it.

RTM is a very important right for leaseholders to exercise should they see fit. The landlord's permission is not required, nor do they have to prove any mismanagement or obtain any court orders. However, started the RTM process is not a decision that should be taken lightly, as the RTM company will come with some big responsibilities for all those involved.

Landlords can still have a say on how the property is managed as they have the right to be a member of the newly formed RTM company and to vote on any decisions.

Right To Manage Requirements

In order to qualify for RTM certain conditions, need to be met, and a minimum number of leaseholders are required to take part. There are certain criteria that will determine whether your situation makes your block a good candidate for RTM. We can assist you in making that assessment and guiding you through the technical legalities that might prevent someone from becoming eligible.

The following criteria must be met:

  • The building must be self-contained (or if part of another building, be capable of being redeveloped independently)
  • It must include at least two flats;
  • At least two-thirds of the flats must be let to 'qualifying tenants'
  • It can be part-commercial but the non-residential part must not exceed 25% of the total floor area.
  • Any number of owners can set up an RTM company - but at least half of the flats (50%) in the building must be members of the company before it can actually take over management.

RTM does not apply where the premises fall within the Resident Landlord Exemption.

To fulfil this exemption would require the following-

  • The premises must be other than a purpose-built block
  • They must comprise not more than four flats
  • One of the flats must be occupied by the freeholder or an adult member of their family as their only or principal home for the last twelve months

Right to Manage  - Make the First Step
Not sure what to do or if a development may apply contact:
ian.magenis@scanlanspm.com or 0161 212 8312, for an informal without obligation discussion.

Useful information:
RICS: Royal Institution of Chartered Surveyors
LEASE: The Leashold Advisory Service

manchester estate agent

 

Right to Manage Company Formation Process

There are quite a few steps that you will need to go through to form an RTM company. From the get-go, it's best to have legal advice from expert solicitors. We can help guide you through the entire formation process, and recommend some excellent solicitors who specialise in right to manage company formation and can help with the transfer of management.

Step1: Establish Qualifying Criteria

The first thing you will have to do is to make sure you meet the specific criteria in order to form an RTM company. We detailed these requirements in the section above.

We can help you establish whether you would be a good candidate for right to manage. This first step is very important for many reasons. One of the most important is to ensure that 50% of owners you have with you are committed to seeing this through. You can meet all the other requirements, but this is the only one that may fall through as you make your way through the rest of the right to manage process.

At Scanlan’s we can help you through this whole process. If you have any questions please contact Ian Magenis on either ian.magenis@scanlanspm.com or 0161 212 8312, for an informal no obligation discussion.

Step 2: Form Right To Manage Company & Inviting Participation

To use the right, leaseholders must set up an RTM company and follow certain procedures. The RTM company can manage the building directly or pay a managing agent to do it.

Leaseholders can incorporate the company themselves or instruct a solicitor to do this for you. A number of roles will need to be appointed such as a chairman, secretary, and directors from among the leaseholders. After this, all qualifying leaseholders need to be invited to join with no exclusions. This should be done via a Section 78 Notice Inviting Participation.

  • The RTM Company must be registered at Companies House. Each flat owner will become a member of this company. No shares are issued instead it is limited by guarantee.
  • You will need to decide on a registered office address. You will also need to appoint the initial company Directors and a Company secretary.
  • The appointed officers of your RTM company have all the normal responsibilities of company directors as well as the responsibility for implementing the company's obligation to carry out the landlord's functions for the property.
  • You must hold regular - but not necessarily frequent - meetings.
  • The RTM company must remain solvent at all times so you will have to fund the shortfall where the flat owners don't pay up on time.

If you intend to employ a management agent or keep the current one you must state their name and address. The Articles of Association must be stated or, at least, there should be clear details about where these can be found. You should consider appointing managing agents to cover everywhere except the smallest blocks.

Step 3: Serve Claim Notice

The next step is to serve your Section 79 Notice of Claim. However, you need to wait at least 14 days after you’ve served your Notice Inviting Participation. At this point, you need to be 100% that more than 50% will join you, also don't forget the landlord is entitled to become a member.

The Notice of Claim must:

  • Allow at least 1 month from date of service for the freeholder to serve a Counter-Notice;
  • The date of the acquisition must be proposed. This needs to be at least 3 months after the date proposed for the freeholder's counter-notice.
  • You must state all relevant particulars about qualifying tenants, the right to manage company, and the eligibility of the building for right to manage.
  • Go to all owners, the freeholder, and the current agent.

Step 4: Claim accepted or counter-notice served

At this point, you are in the final stages and may be able to take over the management very soon. Your claim will now either be accepted or a counter-notice will be served.

- If there is no response, this is deemed as the claim is accepted.

- The landlord can accept the claim, and begin planning management transfers on acquisition date

 

Interested in Right To Manage? Speak to Scanlans for an no obligation discussion and start your Right To Manage process.

@ScanlansLLP

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