FLAT FACTS SHEET 1 – RIGHT TO MANAGE

publication date: Oct 6, 2004

Introduction:

The Commonhold and Leasehold Reform Act 2002 gives leaseholders the Right to Manage (RTM) without having to buy the freehold, go through a lengthy LVT process or issue court proceedings against a landlord. When enfranchisement is not an option, the change in the law means that leaseholders now have the right to say how their block is managed and maintained.

Qualifying criteria for Right to Manage (RTM)

• At least two thirds of the flats in the building must be on qualifying leases;
• Each lease must be for a term of 21 years or more;
• There must be at least two flats within the building;
• The non-residential use of the building must not exceed 25 per cent of the total floor space of the building;
• There must be at least 50 per cent of qualifying

** Please note: Where there is a single development of several individual buildings, each building would need to qualify separately for the RTM and make their own applications.

Exercising the Right to Manage (RTM)

• Right to Manage (RTM) cannot be exercised by individual leaseholders, but by a special company identified by Section 73-74 of the Commonhold and Leasehold Reform Act 2002 (this is because the identity of individual flat owners may change over time, but any company that is established will remain the same).
• In order for the company to exercise the right at least 50 per cent of the qualifying tenants in the building must be members of the company.
• There is no minimum requirement of qualifying tenants to form the company initially
• By law all qualifying flat owners must be invited to become members of the Right to Manage (RTM) company

Serving the Notice Inviting Participation for Right to Manage (RTM)

The notice must contain:

• A statement that the Right to Manage (RTM) company intends to acquire the right to manage
• The names of the members of the Right to Manage (RTM) company
• An invitation to qualifying flat owners to become members and the implications of joining
• The name of the directors and company secretary of the Right to Manage (RTM) company
• The name of the landlord and any other person who is party to the lease other than the lessees
• The registered number of the Right to Manage (RTM) company
• The address of the registered office of the Right to Manage (RTM) company
• A copy of the Memorandum and Articles of Association or a statement explaining where these documents can be located

**Please note: The landlord is given a limited opportunity to respond by way of Counter-Notice

Right to Manage (RTM) In Summary

• The Right to Manage (RTM) is a no-fault procedure provided by statute enabling flat owners to take over the management of their building
• The Right to Manage (RTM) is exercised by a Right to Manage (RTM) company on behalf of all participating flat owners…not by those acting on an individual basis
• Legislation must always be checked carefully because there are certain qualifying criteria for the establishment of the Right to Manage (RTM) company
• Process is relatively straightforward if the correct procedures are followed and notice is served. The landlord has the right to respond by the way of Counter-Notice
• Once the Right to Manage has been acquired, the Right to Manage (RTM) company controls the management function of the building along with all the rights and responsibilities that go along with it

Useful Links

For more information on the Right to Manage (RTM) click on the links below to read recent articles covering the subject…

Your Right To Manage - Enfranchisement, or buying the freehold of a building, is not always the most straightforward or cost-effective solution for leaseholders who are unhappy with the way their building is being managed. Often there are cost complications that make this an unaffordable option.

Claim Your Right to Self Manage - Most leaseholders are aware they have the right to manage their block of flats but according to a recent survey the majority of leaseholders admitted they don’t know how to and were unaware of the benefits.

Happy Residents - Residents at the Fair Acre Estate in Bromley selected the not-for-profit organisation to provide full management services for the Estate following a five-way pitch. The Fair Acres (Bromley) Right to Manage Company Limited was formed in September 2005.

Click here to access the News on the Block archive of all the articles covering the Right to Manage (RTM)

Additionally, you can visit the for detailed expert analysis on recent cases involving the Right to Manage…

Bernhard Baron RTM Company Ltd v Unicourt Ltd - The RTM company had served a Notice of Invitation on all the qualifying tenants in April 2006. This was followed, in January 2007, by the service of the claim notice on the respondent.

Gaingold Ltd v WHRA Company Ltd - Gaingold Ltd was the headlessee of premises known as Westchester House, 72 Seymour Street, London. The respondent was an RTM company which gave notice of its intention to acquire the right to manage the premises.

Finland St 1-16 RTM Company v Holding & Management (Solitaire) Ltd - The applicant RTM company applied for a determination that it was entitled to exercise the right to manage. The freeholder argued that the building did not qualify for the exercise of the right to manage and gave three reasons