Your building must meet the following criteria to apply for the Right To Manage:

•  at least two-thirds of the flats must be let on a lease originally granted for more than 21 years
•  it can be part-commercial but the commercial part must not exceed 50% of the total floor area, excluding common parts
•  RTM does not apply where the immediate landlord of any qualifying tenant is a local housing authority.
•  You must have the support of at least 50% of the flat owners within the building. i.e. a block of 6 flats will need at least 3 owners to join the RTM company.

Right To Manage (RTM) was created by the Commonhold and Leasehold Reform Act 2002. It is the legal right for leaseholders to take over the management responsibility of their properties from the freeholder.

1. Criteria

To set up a Right to Manage company the following criteria have to be met:

• At least 50% of the leaseholders in a block must support the move and
• two thirds or more of the leaseholders must have leases on their property that were originally of 21 years or longer and
• less than 50% of the floor area must be used for commercial (as opposed to residential) purposes

It is a good idea to informally find who the fellow leaseholders are in advance and if they are interested in forming an RTM company or becoming members. If you believe there is sufficient support we suggest arranging a meeting of all the leaseholders. Once the RTM company is established each leaseholder will be entitled to become a member of the RTM Company.

2. Agree who will be the supporters and the first Directors and Secretary.

Agree in advance who will pay for the setting up of the RTM Company “the supporters”. This could be anyone or all the RTM members collectively

Company directors have legal responsibilities and we recommend that all potential directors seek legal advice prior to agreeing to be a Director. The Company Secretary has specific duties such as maintaining registers of members and issuing membership certificates (maintaining the statutory books). Whilst the Company Secretary can be a leaseholder this role is usually filled by a professional person. Once the company is established the directors of the RTM company will need to be elected or re-elected by the leaseholders in accordance with the provisions of the companies Act 2006 and the Articles of the company.

3. Set up an RTM Company

An RTM company must be limited by guarantee, have special Articles of Association and include “RTM Company” in its name . We are able to register a RTM company for clients for a small fee.

4. Invitation to participate

The company must serve s. 78 Notices in the prescribed format inviting Participation of non-members (i.e. inviting leaseholders who are not already members of the company to join).

5. Serve Notice on the Freeholder

14 days after 50% or more membership is achieved per block, the RTM Company can serve s.79 “Notice of Claim” on the Freeholder claiming the Right To Manage. The proposed date given in the claim is the “Acquisition Date” and this must be at least three months after the date for the counter-notice.

Note: The Freeholder may serve s.84 Counter Notice within 1 month. The only legal ground of objection is if procedure has not been followed or the building does not qualify. Minor inaccuracies are discounted. If no Counter Notice is issued RTM is determined after 1 month. (Determination Date).

Some Freeholders will seek to delay or frustrate the process although most are resigned to the new rights of lessees.

6. Take over management.

The RTM Company takes over the responsibilities for management of the site. It can either do this itself or appoint a block management company of its choice.

The Freeholder may take up membership of the RTM company.  The RTM company must allocate votes to the Freeholder  according to his holding in the building. The Freeholder or his agent must transfer all uncommitted service charges on the acquisition date or ‘as soon after that date as is reasonably practicable’

The supporters are liable for the Freeholder’s reasonable costs in respect of professional services for which he is personally liable. (e.g. legal and accountancy fees in dealing with the RTM application). Whilst most Freeholders may not make a charge it is possible that the landlord may charge for this which will be the liability of the RTM Company. Where the costs are disputed the Freeholder can only recover them by application to a  First-Tier Tribunal (Property Chamber) after paying a fee of £250 which is not recoverable if the  First-Tier Tribunal (Property Chamber) does not agree the costs. This happened with the very first RTM Company application made by a director of Accounting Services Ltd in 2006. He disputed the Freeholder’s claim for costs and the First-Tier Tribunal (Property Chamber) (LVT at the time) agreed that the Freeholder’s costs were unreasonable. Not only did the Freeholder’s claim fail but the Freeholder was also unable to recover the  First-Tier Tribunal (Property Chamber) fee.  On most of the subsequent RTM formations undertaken the Freeholder has not submitted a claim for costs.

How can we help?

We can set-up a RTM company for clients anywhere in England or Wales (in English only)
We can assist with the entire process and act as a Block Managing Agent for sites in and around Swindon.

Trent Road RTM Company Ltd was established by Block Management Ltd on behalf of leaseholders in order to exercise the Right To Manage for 50 apartments.

The apartments were previously directly managed remotely by the freeholders' agent. The buildings had reached the stage where substantial roof repairs were required and the freeholder had provided estimates of the costs which the leaseholders felt were excessive. The blocks and grounds were also in need of attention with little to show for the leaseholders' service charge payments over many years.

Block Management arranged meetings with leaseholders to discuss the options available and presented detailed financial plans.

The Freeholder did not dispute any of the Right To Manage claims submitted on behalf of each block and Trent Road RTM Company Ltd was appointed to manage the entire site on behalf of the individual RTM companies.

 

Brock End RTM Company Ltd was established on behalf of leaseholders in order to exercise the Right To Manage at the gated development of 6 blocks in Swindon’s Old Town.

The site was previously managed by a large national agent appointed by the freeholder.

Each block acquired their respective right to manage and then agreed to appoint Brock End RTM Company Ltd to act on their behalf to manage the entire site. This ensured that the development was under the control of the leaseholders via one management company.

Service Charges are now significantly lower for leaseholders at Brock End and various improvements have been made to the site.

 

 

 

Florey Court and Peony House RTM Company Ltd was established to allow the Residents Management Company (RMC) to place their own insurance rather than accept the freeholder's premium. Block Management Ltd identified a number of savings including enabling leaseholders to place their own cover via an RTM company.

Block Management Ltd also identified a provision within the lease that allowed the RMC to build a reserve fund to purchase the freehold at a set price, the company is now on its way to building a fund for this purpose which will allow each leaseholder to extend their lease to 999 years and remove ground rent.

Heronbridge Close RTM Company Limited was registered on behalf of the leaseholders of the 24 maisonettes in Heronbridge Close where RTM was acquired in 2008. The property had been managed by the freeholder who placed the insurance and sent non-local contractors to maintain the site leading to unnecessarily increased costs. The majority of the leaseholders subsequently exercised their right to buy the freehold (enfranchisement) with our assistance in 2018.