Right to Manage
If the block of flats where you live lacks good management or you believe the service charges are too high, there are a number of possible options open to the residents of the block.
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Below you will find more information on these options; however we would recommend getting a member of our experienced Property team on board from an early stage, for a free initial no obligation discussion to ensure you get the outcome you need, at the cost that’s right for you. Please visit our Payment Options page for more details on costs.
One possibility is for the leaseholders to exercise the Right to Manage (RTM) given to them under the Commonhold and Leasehold Reform Act 2002. This forces the transfer of the landlord’s management functions to a special company set up by them.
The landlord or freeholder cannot prevent this process nor is there any need to show that there has been mismanagement in the past. It is just necessary to meet the criteria set out under the Act and to follow the correct procedure.
Sometimes the most difficult hurdle is to ensure that membership of the RTM company comprises the qualifying leaseholders of at least half of the flats in the building. Although, there may be a number residents who feel passionately that things have to change – there is not always a sufficient number of the others prepared to get involved.
It can help at this initial stage to invite an experienced professional to meet with those concerned and go through the process and outline the likely cost. Questions can be asked and a decision reached after considering all the pros and cons.
If a sufficient number are prepared to ‘sign up’ then a new company can be formed; this RTM company, made up of the participating leaseholders, will claim the right to manage and, in due course manage the block into the future.
Is it always a good idea to exercise this right?
Taking over the management should bring cost savings and greater control. It will also bring responsibilities:
- the leaseholders will manage the building through the RTM company and will need to learn about company procedures and find persons prepared to act as officers of the company;
- technical matters relating to budgets, accounts and legal requirements will need to be dealt with;
- any future criticism of management decisions will now be aimed at them!
And so, the employment of a good managing agent and solicitor, with relevant experience, should be one of the items to consider before the process is commenced. The good news is that the decision to appoint such an agent and solicitor will be made by the tenants and not by the landlord.
Where the leaseholders’ relationship is such that they want to have a clean break then buying the freehold of the block of flats can provide a personal solution.
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