Often, I hear from residents and landlords who are fed up of scrupulous or inefficient block and estate managers. I always respond by saying “if you are truly fed up, why not exercise your right to manage”. For this reason, I have decided to write this article. My aim is to help provide you with enough information about right to manage so you can decide whether or not it is something that you would like to implement on any of the blocks of apartments that you own or live in.
Tenants who hold long leases of flats have a certain amount of statutory protection relating to service charges and management, principally under the Landlord and Tenant Act 1985 (LTA 1985). This protection is extended by the “right to manage” provisions of the Commonhold and Leasehold Reform Act 2002 (CLRA 2002), which give long leaseholders of flats the collective right to manage their building.
The key point to note is that you do not need to gain consent from the freeholder or current management agent if you want to take control. You also do not need to prove that your property has been mismanaged in any way.
To implement your right to mange (RTM) an RTM Company must be setup. New prescribed articles for RTM companies, reflecting the changes made by the Companies Act 2006, have been published and you will need to ensure that the RTM company articles contain these new prescribed articles.
Do I Qualify for Right to Manage?
In order to qualify for Right-to-Manage, the building must meet a certain criteria and a minimum number of leaseholders are required to take part.
a) at least two-thirds of the flats in the building must be owned by ‘qualifying tenants‘
A ‘qualifying tenant‘ is a leaseholder whose lease was originally granted a term on their lease of more than 21 years. There is no requirement for any past of present residence in the flats, nor any limit on the number of flats which can be owned by one person.
b) it can be part-commercial but the non-residential part must not exceed 25% of the total floor area.
c) The right to manage does not apply where the premises fall within the Resident Landlord Exemption.
In order to fall outside the Resident Landlord Exemption, the following must apply:
i) the building must be a purpose-built block;
ii) there must be more than four flats; and
iii) one of the flats must not be occupied by the freeholder or an adult member of their family as their only or principal home for the last twelve months
d) The right to manage relates to a building, so in an estate of separate blocks, each block would need to qualify separately and an individual RTM notice served for each block.
a) The RTM company must meet the statutory requirements. It must be a company limited by guarantee and registered with the Registrar of Companies at Companies House. It must have a Memorandum and Articles of Association which govern the purpose and running of the company. These documents are prescribed by law, within the 2002 Commonhold and Leasehold Reform Act and you are advised to use a professional formation agent, such as Platinum Crown to ensure these documents are correctly produced.
b) The members of the RTM company must comprise of at least half of the qualifying leaseholders of the flats in the building
Who can join the RTM Company?
All qualifying leaseholders are entitled to become members of the RTM company; no one may be excluded for any reason. This is not a matter of choice, the legislation opens the membership to all qualifying leaseholders.
It is also important to note that once the right to manage has been acquired, the freeholder is also entitled to membership of the RTM company.
How do I Take Over Management of My Block?
There is a formal set of procedures that needs to be followed when taking control of the management of your block. Most people hire a solicitor or a specialist in right to manage to help them acquire the management of their block.
The freeholder will probably have service contracts already in place which will need to be managed. Once the RTM company takes over the management of the building, the leaseholders’ covenants under the lease become the responsibility of the RTM company, the RTM company must ensure that all covenants are complied with and keep the landlord informed.
Service contracts could include cleaning, gardening, general maintenance, health and safety checks and more. Platinum Crown has an in-house maintenance team which can help keep your costs down but we can also use contractors that you recommend if you are happy with their level of service.
Once you have control of your building, you have the option of either managing it yourself or hiring a new management agent. Ideally, if your intention is to appoint a new management agent, you should get them involved from the start of the process.
If you require further information or if you want someone to perform a Right to Manage on your behalf, contact Cyril Thomas (our Block and Estate Management Specialist) on 01206 705 555 or email us at firstname.lastname@example.org.