Right to Manage: leaseholders taking over building management

Do you own a leasehold flat? Maybe your landlord or managing agent is letting the building fall apart. Maybe they are not spending the service charge money in the right way. Or maybe they make choices you do not agree with. You may be able to use the Right to Manage (RTM). This lets you take control of how the building is run.

What is the Right to Manage?

The Right to Manage is a legal right. It comes from the Commonhold and Leasehold Reform Act 2002. It lets leaseholders who qualify take over the management of their building from the landlord. You do not have to prove the landlord did anything wrong. You do not have to buy the freehold.

If RTM works, a company set up by the leaseholders takes over. This is called the RTM company. It takes over the management jobs. The freeholder still owns the building. But they lose the right to manage it.

Who can use the Right to Manage?

To qualify, the building must meet some conditions:

• At least two-thirds of the flats must be held on long leases (first granted for more than 21 years)
• At least 50% of the qualifying leaseholders in the building must want to join the RTM company
• No more than 25% of the floor space in the building may be commercial (shops, offices, etc.)
• The building must be a self-contained building or part of one that can be managed on its own

Some buildings are left out. For example, conversions with fewer than certain numbers of units, where a resident landlord lives in the building.

What does an RTM company take over?

The RTM company takes over jobs that the landlord used to do. These include:

• Managing repairs and upkeep to the building
• Arranging buildings insurance
• Setting the service charge and keeping records of it
• Choosing and instructing managing agents and contractors
• Giving approvals for changes and subletting under the lease

The RTM company does not get the freehold. So the landlord still owns the building. They can still grant new leases.

The process: step by step

1. Form an RTM company. This is a company limited by guarantee, set up just for this. It must include at least one qualifying leaseholder as a member.
2. Invite participation. You must invite every qualifying leaseholder in the building to join the RTM company. Give them at least 14 days to reply.
3. Serve a claim notice. This is a formal notice served on the landlord. You also serve anyone else with a relevant interest, such as a managing agent or head lessee. The notice says the RTM company plans to take over the right to manage.
4. Landlord's response. The landlord has one month to serve a counter-notice. This either accepts or rejects the claim. If they reject it, they must give a reason.
5. Dispute to the First-tier Tribunal. If the landlord disputes the claim, you can apply to the tribunal. The tribunal decides whether the RTM conditions are met.
6. Acquisition date. If the claim works, management passes to the RTM company. Under the current process, this is at least three months after the claim notice was accepted.

What are the costs?

The main costs of claiming RTM are:

• Setting up the RTM company (a small company formation fee)
• Legal advice to draft and serve the notices in the right way
• The landlord's reasonable costs of dealing with the claim (the RTM company pays these at the moment)
• Tribunal fees if the landlord disputes the claim

The right is meant to be easy to use, without a full court case. But getting the notices right matters. Mistakes in the process can make the claim fail.

What happens if the RTM company struggles to manage the building?

Once you have RTM, you are in charge of the management. This means you must:

• Collect service charges in the right way and hold them in trust
• Keep accounts and have them certified
• Follow the lease terms
• Keep up the buildings insurance
• Follow health and safety rules for shared areas

Many RTM companies bring in a professional managing agent to do the daily work. You keep the oversight and the say in decisions, instead of the landlord.

Disrepair and RTM

Maybe you want RTM because your landlord has let the building fall into disrepair. This could be a roof not fixed, damp in shared areas, broken lifts, or structural problems. RTM gives you the management control to fix those issues from now on. But what if disrepair has caused you direct loss? This could be damage to your flat, harm to your health, or a drop in the value of your lease. If so, you may also be able to make a separate disrepair or negligence claim against the original management.

When should I contact Support for Tenants?

Has your flat got disrepair that the landlord or managing agent has ignored? This could be damp, leaks, or structural problems. Call us on 0800 030 4669. A disrepair claim is separate from RTM. It can run alongside it.

No upfront cost. You only pay if you win, and the fee comes out of the compensation, not your pocket. If you don't win, you pay nothing.

Sources

• Commonhold and Leasehold Reform Act 2002 (legislation.gov.uk)

Related articles

• Leaseholder service charge dispute
• Section 20, leaseholder major works consultation