The right to manage was introduced by the Commonhold and Leasehold Reform Act (2002) as an alternative to purchasing a freehold. Essentially, leaseholders now have the right to form a company to take over the management functions of the landlord without needing to buy the freehold from the landlord.
Why Would Tenants Want to Use the Right to Manage Procedure?
The leaseholders of a block of flats may decide that they want to manage the block themselves, but without the expense of purchasing the freehold. If they take this route they are not required to take over the day-to-day management of the building as they can appoint their own managing agents. This may be an attractive option where the leaseholders/tenants are mistrustful of the managing agents appointed by the landlord.
How Do Tenants Exercise Their Right to Manage (RTM)?
The process is commenced with setting up a special right to manage (RTM) company, which is limited by guarantee, and then notices inviting participation are sent out to all flat owners who are not members of the company.
Once 14 days have passed from the date of the notices inviting participation and as long as 50 percent or more agree to be a part of the RTM, then a formal claim notice is served on the landlord.
The landlord must give at least one month for the RTM to respond by way of counter notice either accepting the RTM claim or denying it.
The claim notice also gives the date from which the management of the building is taken over ("acquisition date"). This must not be less than three months from the date given to serve the counter notice.
If the matter is undisputed, then from the acquisition date the RTM takes over the management of the building and all existing contracts entered into by the landlord for management are frustrated and the RTM is free to appoint new managing agents and enter into new management contracts as it sees fit.
The process for an unchallenged RTM claim takes about four months to complete.
Why Choose HPLP?
Our property law solicitors are recognised experts in the area of leasehold enfranchisement and housing law in general. Our work is accredited by the Association of Leasehold Enfranchisement Practitioners (ALEP) and recognised by LEASE, the government-funded website.
HPLP also offers you free initial advice up to a half-hour and a fixed fee estimate so you know what charges you will incur should you decide to pursue your right to manage with us.
To find out if you qualify to manage your own property, contact our firm to speak with Ash Oberoi.