Taking Control of your Most Valuable Asset: The Right to Manage Your Flat

Key Benefits

As you own most of the value of your block of flats, exercising your Right to Manage is a prudent step for leaseholders to take, since it will allow you to run your own affairs and make decisions about the block in which you live. Invariably, you will save some money on insurance premiums and contractor’s costs and you can plan expenditure much better.

Qualification Requirements

It sounds simple enough to do, but there are conditions that must be met before you can exercise your right. These are:

• The building must be self-contained
• There must be at least 2 flats
• Two-thirds of the flats must be let to Qualifying Tenants
• If there are any non-residential parts of the block, they cannot exceed 25 percent of the gross internal floor area (for example, a shop below the flats)

There is no minimum residence requirement with the RTM legislation, meaning that you can apply no matter how recently you have bought your lease. 

Exercising the Right to Manage

The right is exercised by the RTM company and not the individual tenants. The RTM company members must be at least half of the Qualifying Tenants in the building.  The company must be set up as a Company Limited by Guarantee, registered at Companies House and be specifically designated as an RTM company.   

Once the company is formed, it must invite leaseholders of qualifying leases who have not previously been involved to join the company. The landlord will also become a member of the company (once the RTM has been acquired).  All leaseholders should be given the chance to participate. 

It would be prudent to investigate how the building is currently managed. This can be done by the RTM company serving a notice on the landlord, which requires the landlord to provide the information that the RTM company will need.

Once all the information has been gathered, it is time to make your application to the landlord. There then follows a claim and counter-claim procedure, and it is vital that the correct material is captured and presented in accordance with the law and your best interests.

Landlord’s Duties

The landlord is under a duty to serve a Contractor Notice on all those who provide services to the block and a Contract Notice on the RTM company, giving the company details of the contractors. This is to ensure a smooth takeover from landlord to RTM company and that services for the block are not disrupted.

The landlord is also under a duty to transfer any funds held by them to the RTM company. The landlord is entitled to retain any sums that need to be discharged up to the date of acquisition.

Acquisition of the Right

The Acquisition Date is when the management functions transfer to the RTM company.  It does not matter who was previously responsible for these functions, on the Acquisition date they all pass to the RTM company.  The only functions retained by the landlord are the collection of ground rents and the right to forfeit the leases. 

On the Acquisition Date, the landlord is also entitled to membership of the RTM company with full voting rights.

Once the functions are transferred, the matter is complete. There is no requirement to register the interest at the Land Registry and there is no Stamp Duty Land Tax Liability.

Take Expert Advice

In summary, Right to Manage is a valuable option for leaseholders, and an increasingly attractive opportunity in an uncertain property market.

It is essential to take expert legal advice. We have extensive experience in successfully handling Right to Manage matters. 

To discuss your options either as a landlord or as a tenant, please contact our Property Team at Silverman Sherliker:

Richard Gordon - rkg@silvermansherliker.co.uk
Maria Guida - meg@silvermansherliker.co.uk
Scot Tsang - sskt@silvermansherliker.co.uk

or call +44 (0)20 7749 2700