At Scanlans Property Management, we support several people who want to set-up a Right To Manage company. However, there are many more that aren’t aware of their Right To Manage, and so could be missing out on an opportunity.
What is a Right To Manage Company?
The Right To Manage (RTM) was given to leaseholders through the Commonhold and Leasehold Reform Act 2002. A Right To Manage Company primarily affects leaseholders and their Landlords. It was essentially introduced to allow leaseholders to take control from bad Landlords, as well as give those who hold the value within the property the power to take responsibility for the block.
Whilst most block management is undertaken by a Landlord, leaseholders of flats within the residential block actually have the right to take responsibility of the management of the block. This means that the leaseholders will be responsible for the upkeep and maintenance of all communal areas, such as concierge areas, gardens and lifts.
They’ll also be responsible for hiring outside contractors (usually done through a professional managing agent), as well as collecting monies by way of a service charge to help cover the maintenance costs of the block.
Its important to note, the Right To Manage only applies to flats within Residential Blocks, so those with a house do not qualify. There are also a number of other qualifying rules that apply before you can go down the Right To Manage process. These include:
- Two-thirds of the flats are let to tenants whose lease was initially granted for more than 21 years.
- There are a sufficient number of qualifying tenants to form the Right To Manage company – this must be equal to half or more of the number of flats within the residential block
- The Right only relates to a single building, not separate blocks even if they are within the same development, each block will need to enter into a separate Right To Manage, so bear this in mind when forming your RTM company
If you qualify, you can then submit a letter to the Landlord, informing them of your wishes. You do not need the Landlord’s permission to form a Right To Manage company, though a Landlord can block it if they feel the Right To Manage Company does not qualify.
Should You Form A Right To Manage Company?
Having full control over the way your building is managed can be very tempting. However, whilst the company formation process is relatively straight forward, there are a number of costs and liabilities you should consider before going through the Right To Manage Process. Check out our other pages for more information on the process and the costs involved.
If you’re considering starting a Right To Manage company, you should also be aware of the liabilities that will now fall at your door.
You and all members of the company will be responsible for all repairs, maintenance and redecoration of all communal and shared areas within the building and its grounds. You’ll be responsible for ensuring the communal services take place. Furthermore, you’ll need to collect service charges, ensure accounting and business procedures and followed to remain compliant and be contactable to ensure the smooth day-to-day management of the block.
This can be quite an undertaking for those who have no prior experience or are not professionals. It is therefore recommended that you seek the support of a managing agent if you are looking to form a Right To Manage company. Not only can a managing agent help you through the process of forming a Right To Manage Company, but you can also defer and rely on them to ensure all maintenance, management, service charges and general compliance are taken care of.
Managing agents will have the software to ensure repairs are completed on time, as well as the infrastructure and contacts with contractors to obtain good prices for quality work.
On the face of it, forming a Right To Manage company seems a great opportunity, especially if you’re not happy with the way that your current Landlord is running the residential block!
However, there are a number of liabilities that come with managing your residential block, and if not managed professionally, can lead to problems. Utilising a Managing Agent to take care of the majority of the management of the Residential Block means you can keep control, whilst also maintain a smooth operation.
If you’re interested in forming a Right To Manage company, why not speak to the experts first?
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