Right to Manage
The Right to Manage (RTM) was introduced through the Commonhold and Leasehold Reform Act 2002. It gives leaseholders the statutory right to take over the management of their property from the landlord by setting up a special independent company exclusively for the block; a Right to Manage Company.
RTM is an important right for leaseholders, Freeholders do not need to give their permission and Polecat Properties could set it up for you relatively quickly, however its important to realise that being responsible for a Right to Manage company comes with responsibilities and all aspects of block management would then becomes the company’s responsibility so it is not to be entered into lightly.
If you are considering Right to Manage then we would recommend reading the Leasehold advisory Guide to get an idea of everything that is involved.
There are criteria that need to be met in order to qualify for Right to Manage as detailed below taken from the guide above.
The building must meet certain conditions and a minimum number of leaseholders are required to take part.
- at least two-thirds of the flats must be let to ‘qualifying tenants’*
- it can be part-commercial but the non-residential part must not exceed 25% 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.
- RTM does not apply where the premises fall within the Resident Landlord Exemption. To fulfil this exemption would require the following:
- The premises must be other than a purpose-built block (for example a converted house); AND
- They must comprise not more than four flats; AND
- One of the flats must be occupied by the freeholder or an adult member of their family as their only or principal home for the last twelve months.
*A ‘qualifying tenant’ is a leaseholder whose lease was originally granted for an original term of more than 21 years. There is no requirement for any past or present residence in the flats, nor any limit on the number of flats which can be owned by one person.
The right to manage may only be exercised by a right to manage company and the members of the RTM company must comprise a sufficient number of qualifying tenants. The required minimum number of qualifying tenants must be equal to at least half the total number of flats in the building.
The right relates to a building, so, in an estate of separate blocks, each block would need to qualify separately and an individual RTM notice served. In the case of an estate of flats under the same management, it would be sensible to take over the management of the whole estate, but this would have to be accomplished by application in respect of each separate block
Polecat Properties can set up a Right to Manage company on behalf of the block members. This Service is as follows:
- Create a new Right to Manage company, set it up with Companies house
- Registration for entry to be made in the proprietorship register of the affected title via AP1 form
- Serve S82 Right to information notice to the landlord (The landlord has 28 days to respond)
- Serve S78 Notice inviting participation on all qualifying leaseholders who are not members of the RTM company. At least 50% of qualifying leaseholder are required to sign up as members of the RTM company
- Service S79 Notice allowing landlord to serve a counter notice. Where the landlord serves a counter notice, the RTM must apply to the first-tier tribunal. Polecat Properties can also act in this regard. N.B. The tribunal attracts a fixed fee of £100 and a hearing fee of £200. These fees are not included in the fee paid to Polecat Properties for setting up the RTM company.
- Serve S83 Right of access notice, requiring access for inspection if felt necessary.
- Serve S93 Duty to provide Information Notice (The landlord has 28 days to respond)
- Once the acquisition date and the RTM company has officially taken over Management, the landlord may take up membership of the RTM company. Polecat Properties will liaise with all parties to facilitate this.
The RTM company will then be all set and ready to start the day to day business of block Management.
The Fee for the Set Up Service as outlined above is:
£750 (including VAT)