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Right to Manage

Take Control of Your Development - Right to Manage with Neil Douglas

The Right to Manage (RTM) was introduced by the Leasehold and Commonhold Reform Act 2002. It gives leaseholders the right to take over the management of their development from their freeholder, provided the building is eligible.

Leaseholders have to set-up and become members of a special company called a Right to Manage Company, which will take over responsibility for the landlord’s (or freeholder’s) duties under the lease with respect to services, repairs, maintenance, improvements, insurance and management.

The RTM Company then follows a formal process to give notice of claim to the freeholder / landlord, agree the claim, and prepare to take over the management.

At Neil Douglas we can help you with the Right to Manage process, including:

  • Checking the validity of the claim, lease and land registry document review, visit to site.
  • Arranging formation of the company, creating membership forms and register of members, appointing directors and acting as interim company secretary.
  • Serving the necessary notices on leaseholders and the freeholder.
  • Providing follow up information to the freeholder to enable them to validate the claim.
  • Keeping leaseholders up to date with the process.
  • Confirming the claim and arranging registration at the Land Registry.

Once the claim is accepted we can handle the handover process with the outgoing manager / agent and manage the development going forward, if required.

The Benefits of Right to Manage

  • Ensuring that leaseholder concerns are prioritised - a new decision making process which emphasises the priorities identified by leaseholders rather than the freeholder or their managing agent.
  • Increased accountability to leaseholders - through a company which all leaseholders can become members of and which they can choose to become a volunteer director of.
  • Setting service charges at an acceptable level – by achieving better value for money from contractors and in particular in the placing of the buildings insurance.
  • To give leaseholders a say in the appointment and retention of the managing agent.
Risk Assessment

The Challenges of Right to Manage

  • It requires a minimum of 50% of leaseholders to support the claim and become members of the company.
  • At least two owners of different flats will need to volunteer to become directors of the new RTM Company and become responsible for overseeing the management, although they can have the help of a managing agent.
  • The freeholder can charge reasonable costs for considering the claim and providing the counter notice.
  • If the freeholder believes that the building doesn’t qualify or the correct process for the claim has not been followed they may reject the claim. It may be necessary to apply to the First Tier Tribunal (Property Chamber) for a judgement on the claim.
  • The process is reasonably lengthy and usually takes 6 - 8 months.
  • The handover from the previous agent can be fraught. All existing contracts are severed at the acquisition date and there is often a delay in receiving existing service charge funds.
Risk Assessment

Understanding the Obligations of the RTM Company

  • The acquisition of the RTM doesn’t mean that flat owners can do what they like without regards to the lease.
  • The RTM Company takes over most of the obligations and responsibilities of the freeholder and they must comply with the lease in the same way that the freeholder should do.
  • The freeholder will still demand and collect any ground rent.
  • There are some circumstances when the freeholder still has to give their consent even after the RTM has agreed a course of action e.g. for assignment of a lease, consent for alterations.
  • The volunteer directors have a duty to act in the best interest of the company and they should avoid conflicts of interest particularly on issues relating to their own property.

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