Right to Manage - The Pros and Cons

Under the Commonhold and Leasehold Reform Act 2002, ‘Right to Manage’ (RTM) gives qualifying leaseholders in England & Wales the right to take over the management of their freeholder or landlord managed property without having to prove the freeholder/landlord is at fault or has mismanaged the building.

It is simply a transfer of responsibility and decision making from the freeholder or landlord to a special company set up by leaseholders to manage their building – the Right to Manage company (RTMCo).

Benefits of creating an RTM company include:

  • Enables leaseholders to take control of the management of the building
  • Allows leaseholders to decide on how their property is managed

However you should bear in mind:

  • RTM requires 50% or more of property owners to sign up. With absentee landlord owners this is not always easy and can be very time consuming.
  • Directors of the RTM company will have to be appointed and these responsibilities should not be taken lightly.
  • All Directors will have to commit their time and energy to the RTM Company
  • The process of exercising Right to Manage can be complex and will inevitably involve expenditure in legal expenses and set up costs.
  • Remember the freeholder/landlord will be entitled to a vote as well.

This summary of some of the key aspects of Right to Manage is not exhaustive, is for general information only and is not intended to provide legal advice.

An alternative option for Residents’ Association (RA) seeking greater control of their development

Is your Residents’ Association formally ‘Recognised’ under Section 29 of the Landlord & Tenant Act 1985? The Landlord will recognise a Residents' Association, providing the association can clearly establish that it has a genuine membership of at least 60% of the owners of the properties on the development. Recognition must be given by notice in writing by the Landlord to the secretary of the RA.

The key difference is being a properly constituted and democratically run ‘Recognised’ RA is that it has additional legal rights under the Landlord & Tenant Act as part of the management process but without the costs and responsibilities normally associated with running a RMC or RTM Company.

Once formally ‘recognised’ the secretary of the recognised RA can then legally:

  • Ask for a summary of service charge costs incurred
  • Ask to inspect accounts and receipts relating to the service charge for the property
  • Request a summary of insurance cover
  • Be consulted about the appointment or reappointment of a managing agent
  • Appoint a surveyor to advise on any matter relating to service charges

Want to get in touch with our property management RTM specialists?

If you would like to talk to our experienced RTM Legal and Property Management specialists about RTM call 01582 798142 or email us now on rtmadvice@ompropertymanagement.co.uk.

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If you’re a residents’ association looking for Right to Manage help or advice or a quotation please let us have your details. We’ll also send a Free Copy of our ‘6 steps to setting up a Right to Manage (RTM) Company‘ leaflet.
 

 

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