Right to Manage (RTM) is the right of leaseholders to form a company to take responsibility for the management of their block. It is important you understand the Right To Manage company formation process to determine whether you are eligible. Get in touch if you’re unsure or need help forming your Right To Manage company, we’ll be happy to help.
Available to leaseholders of flats only, Right To Manage enables the people who live in the property to take control away from Landlords and managing agents.
If you are a leaseholder, you may be interested in forming a Right to Manage Company. At Scanlans, we’re experts in helping people like you form Right to Manage companies. The process is relatively straightforward, and consists of the following steps.
Research Your Right To Manage Company
As mentioned, it is straightforward to set up a Right to Manage company. You do not need your Landlord’s permission, and you don’t even need a reason. However, it is important to first understand the responsibilities and liabilities of taking over the management of the building.
As managers of the building, you’ll be responsible for all decision-making relating to budgets, the agent tasked with the upkeep, repairs and overall management for services relating to the building. One of your duties as a Right To Manage company is to decide whether to perform the day-to-day management of the services relating to the building, or to instruct a managing agent such as Scanlans Property Management to carry out the work and manage the building.
For most buildings, its best to get a professional managing agent involved, as they have the expertise and understanding of processes to be able to effectively manage the building.
Other responsibilities include the following:
– The Right To manage company must appoint officers, similar to company directors.
– Like any company, there needs to be AGM style meetings for all members to share their views on the management of the building.
– You will have to deal with issues relating to neighbours and fellow leaseholders.
– Directors within the Right To Manage company must be aware of the company, healthy and safety and housing laws.
Right To Manage Qualification
The next step of the process is to determine whether your building qualifies for Right To Manage. For a start, two-thirds of the flats at least must be let to tenants whose lease was originally given for more than 21 years. The building may have some commercial elements, but this must not exceed 25%.
Right to Manage relates to an individual building, so in the case of an estate, where there are multiple residential blocks, each would require its own RTM company should you choose to go down that route.
Right To Manage Company Formation
Once you’re satisfied that you are eligible, the next step is to form a Right To Manage company. The company itself is the entity that will obtain the Right To Manage and subsequently take responsibility for the management of the building.
As with any company, the Right To Manage company requires the following during its incorporation:
– Memorandum of Association – This is a statement given and signed by those forming the Right To Manage company detailing their intention to set up the company.
– Articles of Association – This sets out the purpose of the company.
If you’re ready to incorporate your Right To Manage Company, contact us today. We can form the company on your behalf.
Invitation To Qualifying Leaseholders
All qualifying leaseholders must be invited to become members of the Right To Manage company. The invitation must be served to all who qualify in writing. The letter must state the intentions of the Right To Manage Company, the current members, the company details and invite them to become a member.
The letter should also detail information explaining the possible financial liabilities for joining the Right To Manage company. It should also detail the intentions of the company relating to whether it plans to use a Managing Agent or not. Finally, the notice should also include the Articles of Association.
Exercise the Right To Manage
Once 14 days has elapsed following the notice of participation, the Right To Manage Company may now exercise the right to manage the building. This is done by serving the Landlord with a Notice of Claim. This should include the full names and addresses of all qualifying tenants, dates for a counter-notice to be received from the Landlord, details of the qualification for the Right To Manage company and the date for the Right To Manage company to acquire the right to manage the property.
Gain Access for Inspection
Once you have served the claim notice, you may now gain access to areas that are usually not accessible for leaseholders. This is so you’re able to determine the state of the areas you will now be responsible for.
The Landlord has the right to then provide a counter-notice, which can either agree to the Right To Manage, or provide reasons why the Right To Manage is not entitled to proceed. If the Landlord provides reasons why the Right To Manage cannot proceed, the Right To Manage company must find a decision via a Tribunal.
Reimburse Landlord Costs
During the process, the Landlord may incur costs. These are to be refunded by the Right To Manage company.
Right To Manage Acquisition
This is the exciting date where the Right To Manage company formally takes control of the management of the company. At this stage, its important to ascertain as much information as possible from the Landlord. For example, the Landlord will have current contracts in place with third parties to help with the management of the building. The Right To Manage company will need to inform all third-parties informing them of the change in management. The Right To Manage company must also request any other information it requires from the Landlord, such as accounting information and maintenance schedules.
It is likely that the Landlord will also have service charges that haven’t yet been spent. This money should be recovered from the Landlord, and then spent in accordance with the agreed management of the building.
The Right To Manage Process can be very valuable to leaseholders looking to have more control over the way their building is managed. Whilst it does mean increased responsibility, employing a professional managing agent such as Scanlans Property Management can help produce the desired results.
If you’re interested, get in touch with our dedicated Right To Manage team, who will be able to guide you through the process, including the Right To Manage company formation.