What is the Right to Manage?
If you are a tenant in a block of flats the Right to Manage, “RTM”, allows you to acquire the management functions of the landlord.
The management rights are transferred from the landlord to a RTM Company which the tenants control. After this the RTM Company can appoint a new managing agent to deal with the running of the block.
Once management rights have been transferred to the RTM Company the landlord becomes entitled to the membership.
What are the benefits to the Right to Manage?
Acquiring management rights has a number of benefits:
- Tenants gain control of the management of the building and the appointment of the Managing Agent;
- It is cheaper than other options such as enfranchisement as you don’t have to pay a premium to the Landlord; and
- It is relatively straightforward as there is no need to evidence poor performance by the current Landlord or Managing Agent.
Do I qualify for the Right to Manage?
There are a number of requirements which the tenants and the building must comply with to be eligible:
- There must be at least two flats in the building containing qualifying tenants (i.e. a tenant who was granted a residential lease of over 21 years)
- At least two thirds of the total number of flats in the building must be owned by qualifying tenants.
- Not less than 50% of the qualifying tenants must want to proceed with the RTM.
- The building or part of the building must be self-contained i.e. structurally detached from other buildings or parts of buildings.
- No more than 25% of the building can be used for non-residential purposes (e.g. commercial leases).
- None of the exclusions apply (e.g. the landlord must not be a resident landlord).
What are the steps in the Right to Manage?
There are a number of steps involved in the RTM process:
- Initial Survey & Valuation – A survey and valuation should be carried out first so that the tenants understand the condition of the building, any potential risks or issues, and the potential costs involved.
- Participation Agreement – For larger buildings a contract should be entered into between the tenants so that they know what their rights and responsibilities are during the RTM process.
- Incorporate a RTM Company – It is a requirement that a company is used for the RTM process.
- RTM Company invites tenants to become members – The RTM Company must invite any qualifying tenants that are not already members to join the RTM Company.
- RTM Company serves a Claim Notice on the Landlord – This notice gives the landlord at least two months to respond, the “Response Date”, and gives the date three months after the Response Date on which the RTM Company intends to acquire the management rights, the “Acquisition Date”.
- Landlord serves a Counter Notice – The landlord has to serve their notice before the Response Date. They will either: accept or dispute the right of the tenants to claim RTM.
- Application to Tribunal – If the Landlord disputes the RTM the RTM Company can apply to the Tribunal within two months of the Counter Notice to determine the matter.
How much does it cost to exercise the Right to Manage?
Once the Claim Notice is served the RTM Company becomes liable for the landlord’s reasonable costs (legal costs in dealing with the notice, accountancy costs arising from provision of accounts, and the costs of their managing agent in the hand-over of management records and functions).
The costs incurred in dealing with any application to the Tribunal are paid for by each party.
How can Pinney Talfourd help?
Pinney Talfourd have experienced and professional solicitors who regularly deal with the RTM process, challenging RTM claims, and presenting matters before the First-tier Tribunal (Property Chamber).
We understand the process and requirements and can ensure that the RTM claim is dealt with professionally.
