Has The Biggest RTM Claim To-date Paid Off For Flat Owners

Flat Living readers may already be familiar with Century Wharf in Cardiff Bay. The development hit the news last year when flat owners living there achieved the biggest ever Right to Manage victory. After months of legal wrangling, RTM was finally acquired in August 2014. Warwick Estates has now been appointed by the RTMCo and manages the estate from its office in Cardiff.

The development at Century Wharf was built over a number of years, with construction divided into six phases starting from 2001. More than 900 flats are split across 19 buildings, with a mixture of long leaseholders and tenants renting properties at the luxury waterside development, which is located close to the lively entertainment area of Mermaid Quay in Cardiff. Residents benefit from a central location, good transport links and leisure facilities on site and many have fantastic views over the Bristol Channel and River Taff. Prices of the flats start at around £100,000 for a studio apartment up to £295,000 for a luxury duplex penthouse. There is a wide range of on-site amenities including 14 acres of landscaped gardens, large swimming pool and gym, 24-hour concierge and secure parking.

Despite all the plus points of living in such a well-appointed development, what the residents did not enjoy so much was the fact that they didn't feel they had enough control over the financial aspects of management and maintenance at Century Wharf. As a result, they took the decision to go down the RTM route with help from Warwick Estates and the Right to Manage Federation, which represented the leaseholders in the FTT.

“Warwick Estates was approached by a leaseholder who owned a property in another block the company managed in Cardiff as well as a property in Century Wharf,” explains Warwick's Uyi Otokiti. “Based on the quality of service Warwick Estates provided him with, he felt an introduction to the rest of the committee at Century Wharf was needed. We then did a presentation to the board of Century Wharf and from there began the RTM process,” he explains.

The process took around 18 months from start to finish. With so many individual leaseholders involved in the claim this was inevitable but the process was made more complicated by the nature of the development. According to Uyi: “The biggest problem we encountered was gaining the approval signature from every single leaseholder in the development. With most flats being sold as buy to let properties we probably only had around 300 leaseholders actually living on site and almost 700 living elsewhere. We had no choice but to go to all the letting agents in Cardiff, manually searching for each individual. We then had to get them to agree to go down the RTM route”. Having overcome this hurdle, Warwick's problems were far from over as the RTM legislation at the time wasn't clear as to whether one RTM company could run several blocks. This meant three separate RTM companies had to be formed in order to make the claim. The case went back and forth as Justin Bates, the barrister for the landlord, argued for individual RTM companies for each of Century Wharf's individual blocks. Ultimately, after an Upper Tribunal decision it was ruled that one RTM company could manage multiple buildings and RTM for the whole development was acquired on 8 August 2014.

The potential benefits of RTM for residents are clear. Flat owners now have responsibility for appointing their own managers and have full control of budgeting, choosing insurance providers and maintenance contractors and planning for major works programmes. If Warwick Estates turn out not to be as good as they claim, changing managing agents is now easier to accomplish.

So what has been achieved since residents took control at Century Wharf? “It has only been six months since RTM was acquired at Century Wharf,” says Uyi, “but already we have added a state of the art new gym for residents at the development and introduced the fastest fibre-optic broadband and at the same time reduced residents' annual budget by £200,000.”

What Is The Right To Manage

RTM is the legal right of leaseholders in a block of flats to take control of the management of their block without proving fault on the part of the landlord. In order to be eligible both the block or blocks and the leaseholders must meet criteria set out in the Commonhold and Leasehold Reform Act 2002. The premises must consist of a structurally detached building or part of a building that can be served independently. The block or blocks must contain at least two flats owned by qualifying tenants, and at least two-thirds of the flats must be leased to qualifying tenants.

A block won't qualify if more than 25% of the floor area is non-residential, the property is owned by the local authority, or it is a building of four or fewer flats where one is occupied by the landlord as his principle home. In order to qualify, leaseholders must originally have been granted a lease for a period of greater than 21 years.

RTM can only be exercised through an RTM company set up according to statutory regulations. This must be a private company limited by guarantee and its articles of association must state that its object is the acquisition and exercise of the right to manage the premises.

Legally, you do not need a majority of leaseholders to agree to RTM in order to proceed. If at least half the leaseholders in the block support RTM you can go ahead.

RTM is started by the formation of the RTM company with leaseholders as founding members and at least one leaseholder as a director. Once the RTM company is established, it must serve the required legal notices, including a notice on the landlord advising that leaseholders will be exercising their statutory right to manage. So long as the statutory conditions are met the landlord has no legal grounds to object and the right to manage is determined a month later, with the RTM company taking over the management a further three months later.