The Right to Manage (RTM) was introduced under the Leasehold and Commonhold Reform Act 2002, granting leaseholders the legal right to take over the management of their block from the freeholder.
What is RTM?
RTM enables leaseholders to compel the landlord to transfer collective management responsibilities to a Right to Manage Company (RTM Company), which is formed and controlled by the leaseholders themselves. This gives individual apartment owners greater influence over decisions related to block management and the selection of management services.
Many leaseholders pursue RTM due to dissatisfaction with their current management; however, it is important to note that proving negligence or mismanagement by the freeholder is not a requirement for exercising this right.
The RTM Process
To acquire the Right to Manage, leaseholders must follow a structured process:
- Formation of an RTM Company
- Leaseholders must establish a limited company dedicated to managing the block.
- This company assumes the freeholder’s obligations, including services, maintenance, repairs, insurance, and general management.
- Legal and Administrative Requirements
- The RTM Company must adopt Articles of Association governing its operation.
- A Memorandum of Association is required during registration, confirming the founding members’ intent to incorporate the company.
- All qualifying leaseholders are entitled to membership, with exclusion prohibited. Once RTM is obtained, the freeholder also retains membership rights.
- Serving Notices and Compliance
- Various legal notices must be served to ensure compliance with RTM regulations.
- Leaseholders must also consider Land Registry requirements and legal obligations.
Qualifying for RTM
Before proceeding, leaseholders must ensure their block meets specific eligibility criteria:
- Structural Independence – The building must be a self-contained block with independent services.
- Leaseholder Representation – At least two-thirds of flats must be held by qualifying tenants, with at least 50% support from leaseholders.
- Commercial Use Restrictions – No more than 25% of the building can be used for commercial purposes.
- Resident Landlords – RTM may not apply if the landlord resides in the building and the block is small.
If these criteria are met, the block is likely eligible for RTM. However, leaseholders should be aware that they will bear the associated costs, including the freeholder’s legal fees.
Limitations of RTM
While RTM provides control over management, it does not grant the power to alter lease terms or significantly change existing management structures. RTM Companies must work within the constraints of the lease agreements in place. Seeking legal guidance is recommended to address potential complexities.
Benefits of RTM
- Greater control over block management and decision-making.
- Increased accountability and transparency.
- Ability to select preferred management companies.
- Potential for cost savings through more efficient service contracts.
Challenges of RTM
- RTM Companies inherit all management responsibilities, requiring strict compliance with lease terms.
- Volunteer directors must oversee operations without conflicts of interest.
- Essential services, maintenance, and financial oversight must be managed effectively.
How Languard Can Help
Languard Property Management provides comprehensive RTM support, including:
- Assessing RTM eligibility and claim validity.
- Establishing and registering an RTM Company.
- Serving legal notices and ensuring compliance.
- Post-RTM block management to ensure smooth operations.
Final Thoughts
While the RTM process can be complex, working with experienced management agents and legal professionals can facilitate a seamless transition. Proper planning and expert guidance ensure leaseholders maximize the benefits of RTM while maintaining compliance with all legal and operational requirements.
