How to start the Right to Manage (RTM) process
We are contacted by a lot of leaseholders who want to take on the ‘right to manage’ (RTM) for their block of flats, which means they would be able to appoint their own managing agent and take control of how their building is run. But how do you start the ‘right to manage’ process?
Some blocks of flats have a residents’ management company (which may or may not own the freehold of the property) which means that the residents are already in charge. But in other cases, the building is controlled by the freeholder such as a property developer or a large conglomerate. In these cases, residents are often frustrated because, although they are the ones paying the service charge bill, they do not have any official say in how their money is being spent and what works are carried out to their building.
In these cases, you might be interested in exploring the right to manage. This is a legal right, first introduced in 2002, which allows the leaseholders to come together and collectively set up a company called a right to manage company. This company is then able to appoint a managing agent to look after the building. The main benefit of this approach is that the new managing agent reports directly to a committee made up of leaseholders – giving you direct control of how the building is run.
If this sounds like an attractive prospect, you may be wondering how to get started.
Firstly, you need to understand if your building qualifies. This is based on the size of the property, whether there is any commercial space (such as shops, restaurants or offices) and whether the freeholder lives in the building.
Your secret weapon to solving this problem is to set up a Recognised Tenants’ Association (RTA)
It is worth pointing out that the qualification criteria are due to become less strict thanks to the Leasehold & Freehold Reform Act 2024, but we do not have a date when the changes will come into force.
Once you’ve confirmed that your building does qualify, the biggest challenge is that you need to contact all of the leaseholders. The legislation was drafted to make sure that everyone who owns a flat in the building has the opportunity to take part, and if you know all of your fellow flat owners then this will be straightforward. However, this requirement is used by many freeholder as a ‘gotcha’ – if you do not have the names and addresses of all of the leaseholders, your request will be rejected.
Your secret weapon to solving this problem is to set up a Recognised Tenants’ Association (RTA). In this context, ‘tenant’ means leaseholder, and the main advantage of a residents’ association is that it gives you a formal way to communicate with your neighbours. In order to be officially recognised, you need just over half of the leaseholders to sign up to the association. This is a great solution if you know some but not all of your neighbours – so how do you get the contact details for the rest?
Thanks to a little known regulation (Section 7 of The Tenants’ Associations (Provisions Relating to Recognition and Provision of Information) (England) Regulations 2018, to be precise), the secretary of a recognised tenants’ association has the legal right to ask for a copy of the names and addresses of any leaseholders who are not yet members of the association. Hey presto, you now have the contact details of all leaseholders in your building, and you can proceed with a right to manage request!
There is some excellent guidance about setting up a Recognised Tenants’ Association on the Federation of Private Residents' Associations website, as well as useful templates. If you need any help with the process, do not hesitate to contact us.