Understanding the Right to Manage (RTM)

The Right to Manage (RTM) is a right introduced through the Commonhold and Leasehold Reform Act 2002, which allows leaseholders of residential properties to take over the management of their building or development from the landlord or managing agent. It will enable leaseholders to make decisions about the maintenance, repair, and management of their building, rather than having these decisions made by the landlord or managing agent.

The process for obtaining the Right to Manage RTM involves the formation of an RTM company, which is a company formed specifically to exercise the right to manage. To qualify for RTM, the building must meet specific criteria, such as having at least two-thirds of the flats being leasehold and the leaseholders owning at least two-thirds of the building.

Forming a Right to Manage (RTM) company involves:

Determine whether the building is eligible for RTM: To qualify for RTM, the building must meet certain criteria, such as having at least two-thirds of the flats being leasehold and the leaseholders collectively owning at least two-thirds of the building. The building must also not be a house or part of a house.

Gather support from other leaseholders: At least half of the leaseholders in the building must be in favour of obtaining RTM. It is important to gather support from as many leaseholders as possible to ensure that the RTM claim has the strongest possible chance of success.

Appoint a director for the RTM company: The RTM company will need to appoint at least one director, who will be responsible for managing the company and making decisions on behalf of the leaseholders.

Write the articles of association: The articles of association outline the rules and regulations that will govern the RTM company. It is important to carefully consider the terms of the articles to ensure that they are fair and representative of the interests of all leaseholders.

File the articles of association with Companies House: The articles of association must be filed with Companies House, along with the necessary forms and fees.

Serve notice on the landlord and freeholder: Once the RTM company has been formed, a notice inviting leaseholders to become members of the company must be served on the landlord and the freeholder of the building.

Resolve any disputes: If the landlord or freeholder disputes the claim for RTM, the matter may need to be resolved through a tribunal.

Once the RTM company has been formed, a notice inviting leaseholders to become members of the company must be served to the landlord and the freeholder of the building. If the landlord or freeholder disputes the claim for RTM, the matter may need to be resolved through a tribunal.

Once RTM has been granted, the RTM company becomes responsible for the management of the building, and the leaseholders have the right to appoint a managing agent to carry out the day-to-day management of the building.

The responsibilities of a Right to Manage (RTM) company:

Maintenance and repair of the building: The RTM company is responsible for ensuring that the building is properly maintained and repaired and for arranging for any necessary work to be carried out. This may include arranging for inspections, obtaining quotes from contractors, and overseeing the work once it has been completed.

Management of the building: The RTM company is responsible for managing the building, including making decisions about how it is used and who has access to it. This may involve setting rules and regulations for the building and enforcing them.

Budgeting and financial management: The RTM company is responsible for budgeting and financial management, including setting service charges and collecting contributions from leaseholders to cover the costs of maintaining and repairing the building.

Appointing a managing agent: The RTM company has the right to appoint a managing agent to carry out the day-to-day management of the building. The managing agent is responsible for tasks such as collecting service charges, arranging for repairs and maintenance to be carried out, and enforcing the rules and regulations of the building.

Communication with leaseholders: The RTM company is responsible for keeping leaseholders informed about decisions that affect the building and seeking their input when making important decisions. This may involve holding meetings, sending out newsletters, or using other forms of communication.

Overall, the RTM company has a range of responsibilities designed to ensure the smooth operation and maintenance of the building and protect the leaseholders’ interests.

There are several pros and cons to consider when it comes to RTM. One of the main advantages is that it gives leaseholders greater control over the management of their building, allowing them to make decisions that are in the best interests of the building and its residents. RTM can also lead to cost savings for leaseholders, as the RTM company can negotiate better deals with contractors and suppliers.

However, there are also some potential downsides to RTM. One of the main drawbacks is that it can be time-consuming and complex, requiring significant effort and resources to set up and manage an RTM company. In addition, RTM can be costly, as there are legal and other professional fees involved in the process, and the RTM company may need to take out insurance to cover its activities.

Regarding qualifying for RTM, the building must meet specific criteria mentioned above. In addition, at least half of the leaseholders must be in favour of obtaining RTM, and the building must not be a house or part of a home.

Once the RTM company has been formed, the notice inviting leaseholders to become company members must be served to the landlord and the freeholder. If the landlord or freeholder disputes the claim for RTM, the matter may need to be resolved through a tribunal.

Notice of Claim

The notice of claim is a document that is served on the landlord and the freeholder of a building when a Right to Manage (RTM) company is formed. The notice of claim outlines the details of the RTM claim, including the name and address of the RTM company, the date on which the claim was made, and the grounds on which the claim is being made.

The notice of claim is an important step in claiming RTM, as it formally initiates the claim and allows the landlord and freeholder to respond. If the landlord or freeholder disputes the claim for RTM, the matter may need to be resolved through a tribunal.

The notice of claim should include the following information:

The name and address of the RTM company
The date on which the claim was made
The grounds on which the claim is being made
The names and addresses of the landlord and freeholder

The RTM company needs to ensure that the notice of claim is prepared correctly and includes all necessary information. It is also essential to ensure that the notice of claim is given to the landlord and freeholder following the legal requirements.

The notice of claim can be in the form of a letter or a more formal document, depending on the preferences of the RTM company and the legal requirements in the county where the building is located. It is best to seek legal advice when preparing the notice of claim to ensure that it is properly drafted and meets all requirements.

Landlords Counter Notice

A landlord’s counter-notice is a document that a landlord serves in response to a notice of claim for Right to Manage (RTM) made by a group of leaseholders. The counter-notice sets out the landlord’s position on the RTM claim and may include any objections or challenges to the claim.

If the landlord disputes the RTM claim, they must serve a counter notice on the RTM company within two months of receiving the notice of claim. The counter-notice should include the reasons for the landlord’s objections to the RTM claim and any relevant information that the landlord would like to bring to the attention of the RTM company.

If the RTM company and the landlord cannot agree on the RTM claim, the matter may need to be resolved through a tribunal. The tribunal will consider the arguments of both sides and will decide on the RTM claim based on the evidence presented.

Finally, once RTM has been granted, the RTM company is responsible for managing the building and making decisions about its maintenance, repair, and management. The RTM company can appoint a managing agent to carry out the day-to-day management of the building, and it is also responsible for budgeting and financial management.

Landlords Membership of the RTM Company

A landlord’s membership in a Right to Manage (RTM) company is not generally required or expected. The RTM company is typically formed and run by the leaseholders of a building, who are responsible for making decisions about the building’s maintenance, repair, and management.

However, in some cases, a landlord may choose to become a member of the RTM company, either as a full member with voting rights or as an associate member without voting rights. This may be the case if the landlord has a particular interest in the building or if they wish to have a say in the management of the building.

If a landlord becomes a member of the RTM company, they will have the same rights and responsibilities as other company members, including the right to attend meetings, vote on decisions and receive information about the management of the building. The RTM company needs to ensure that the rights and responsibilities of the landlord are clearly defined in the company’s articles of association.

Legislation Leaseholders should be aware of regarding RTM:

Commonhold and Leasehold Reform Act 2002: This act introduced the right for leaseholders of residential properties to take over the management of their building from the landlord or managing agent. It sets out the criteria a building must meet to qualify for RTM and the process for claiming RTM and resolving disputes.

Companies Act 2006: This act sets out the legal requirements for forming and running a company, including an RTM company. It covers issues such as the appointment of directors, the preparation of accounts, and the dissolution of a company.

Landlord and Tenant Act 1985: This act sets out the rights and responsibilities of landlords and tenants concerning the repair and maintenance of a property. It is relevant to RTM in that it sets out the landlord’s responsibilities about the maintenance and repair of the building and the rights of the tenant to require the landlord to carry out necessary work.

Consumer Rights Act 2015: This act sets out the rights of consumers concerning goods and services, including the right to receive goods and services that are of satisfactory quality and fit for purpose. It is relevant to RTM in that it sets out the rights of leaseholders to expect the building to be properly maintained and managed.

Overall, leaseholders need to be aware of their rights and responsibilities under these pieces of legislation, as they will significantly impact the management of their building and their rights as leaseholders.

Appointing a Managing Agent

The Association of Residential Managing Agents (ARMA) is a professional body for managing agents that work with residential leasehold properties. It has published guidance on the appointment of a managing agent, which includes the following recommendations:

Research potential managing agents: It is important to research potential managing agents to determine which one is the best fit for the building and obtain quotes from multiple agents.

Prepare a job description: The RTM company should prepare a job description outlining the duties and responsibilities of the managing agent. This will help to ensure that potential agents have a clear understanding of what is expected of them.

Consider the managing agent’s fees: It is important to consider the fees that the managing agent will charge, as these can have a significant impact on a budget of the RTM company.

Negotiate a contract: Once the RTM company has selected a managing agent, it should negotiate a contract outlining the terms and conditions of the appointment. This should include details such as the length of the contract, the duties and responsibilities of the managing agent, and the fees that will be paid.

Monitor the performance of the managing agent: The RTM company should regularly review the performance of the managing agent to ensure that they are meeting the needs of the building and its residents.

The basic duties and responsibilities of a managing agent include the following:

Managing the day-to-day operation of the building: This may involve tasks such as collecting service charges, arranging for repairs and maintenance to be carried out, and enforcing the rules and regulations of the building.

Communicating with leaseholders: The managing agent should keep leaseholders informed about decisions that affect the building and should seek their input when making important decisions.

Budgeting and financial management: The managing agent should assist the RTM company with budgeting and financial management, including setting service charges and collecting contributions from leaseholders to cover the costs of maintaining and repairing the building.

Providing advice and support: The managing agent should be available to provide advice and support to the RTM company and individual leaseholders as needed. This may involve answering questions, providing guidance on maintenance and repair issues, and resolving disputes.

The RTM company should carefully consider its options when appointing a managing agent and ensure that the agent has the necessary skills and experience to carry out the role effectively.

Right to Manage (RTM) FAQs:

What is RTM?

RTM is a right introduced through the Commonhold and Leasehold Reform Act 2002, which allows leaseholders of residential properties to take over their building management from the landlord or managing agent. It will enable leaseholders to make decisions about the maintenance, repair, and management of their building, rather than having these decisions made by the landlord or managing agent.

How do I qualify for RTM?

To qualify for RTM, the building must meet specific criteria, such as having at least two-thirds of the flats being leasehold and the leaseholders collectively owning at least two-thirds of the building. The building must also not be a house or part of a house. In addition, at least half of the leaseholders must be in favour of obtaining RTM.

What is the process for claiming RTM?

The process for claiming RTM involves forming an RTM company, a company formed specifically to exercise the right to manage. Once the RTM company has been created, a notice inviting leaseholders to become members of the company must be served to the landlord and the freeholder of the building. If the landlord or freeholder disputes the claim for RTM, the matter may need to be resolved through a tribunal.

Are there any costs involved in claiming RTM?

There may be costs involved in claiming RTM, such as legal and other professional fees. In addition, the RTM company may need to take out insurance to cover its day-to-day operation.

What are the responsibilities of an RTM company?

The responsibilities of an RTM company include maintenance and repair of the building, management of the building, budgeting and financial management, and the appointment of a managing agent to carry out the day-to-day management of the building. The RTM company is also responsible for communicating with leaseholders and ensuring that their input is sought when making important decisions.

Can the landlord or freeholder dispute a claim for RTM?

Yes, the landlord or freeholder can dispute a claim for RTM. If a dispute arises, the matter may need to be resolved through a tribunal.

Can an RTM company appoint a managing agent?

Yes, an RTM company has the right to appoint a managing agent to carry out the day-to-day management of the building. The managing agent is responsible for tasks such as collecting service charges, arranging for repairs and maintenance to be carried out, and enforcing the rules and regulations of the building.

Are there any downsides to RTM?

One of the main drawbacks of RTM is that it can be a time-consuming and complex process, requiring significant effort and resources to set up and manage an RTM company. In addition, RTM can be costly, as there are legal and other professional fees involved in the process, and the RTM company may need to take out insurance to cover its activities.

Overall, the Right to Manage is a useful tool for leaseholders who want greater control over their building management. Still, it can be a complex and time-consuming process and may involve costs that must be carefully considered.

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Right to Manage (RTM) Guide