Applying for the Right to Manage your building can be a great way to take control of building maintenance and the related costs. With this option, there is no lump sum to pay as you are not buying the freehold, and there is no need to prove any fault on behalf of the landlord.
However, the process can throw up some challenges for leaseholders. Here we will be exploring some of the common issues you could encounter and how to overcome them.
Understanding the Legal Process
RTM is a statutory right provided by the Commonhold and Leasehold Reform Act 2002. One of the first challenges leaseholders face when considering RTM is understanding the legal requirements. While the idea of taking control of a building’s management sounds straightforward, the legal process is complex. Leaseholders must understand eligibility requirements, follow prescribed timelines and ensure compliance with regulations.
You should consider seeking legal advice early in the process. Consulting a solicitor experienced in RTM can help clarify whether the building meets eligibility requirements. Engaging a legal expert ensures that forms and notices are completed properly, avoiding any costly mistakes or delays.
Difficulty in Building Consensus
Another significant challenge is getting enough leaseholders on board. For an RTM to succeed, at least 50% of leaseholders must agree to participate. This can be tricky – particularly in larger buildings or those with diverse demographics. Residents may be uninterested, concerned about potential costs or have reservations about upsetting landlord relationships.
Effective communication is key. Organising meetings or creating a committee to discuss RTM openly can help. Clear and informative materials that explain the benefits of RTM (including potential service improvements and cost savings) can help persuade hesitant neighbours. It is also important to address any worries directly. Explaining the costs involved and how these can be managed effectively could ease many people’s concerns.
Managing Relationships with the Freeholder
Not all landlords will welcome an RTM claim. Some landlords might view RTM as a challenge to their authority and resist by employing delaying tactics or even challenging the RTM claim. This can lead to an adversarial relationship between leaseholders and landlords, creating stress and potentially leading to legal battles.
It is important to remain calm and professional, maintaining clear communication throughout the process. Engaging a solicitor who can manage correspondence with the landlord is often a good step. If a landlord is obstructive, a professional who understands the RTM process can help ensure that the leaseholders’ legal rights are enforced. It is also wise to keep detailed records of communications, ensuring that all legal notices are correctly served.
Costs Involved in Setting Up RTM
Setting up RTM involves some costs, although, as you are not buying the freehold, there is no lump sum to contend with. Costs include legal fees, surveyor costs and administrative charges. Some leaseholders may be hesitant if they are concerned about the costs being too high or unpredictable.
To overcome financial concerns, it helps to plan ahead. An estimated budget should be created as early as possible. Costs can be shared among participating leaseholders, making the process more affordable. In addition, speaking to multiple solicitors to gather quotes can help ensure competitive pricing. Once RTM is in place, you could consider appointing a professional managing agent to assist with budgeting and managing expenses, ensuring costs are transparent and manageable going forward.
Lack of Experience in Property Management
Leaseholders taking over management often lack experience in property management. Suddenly having the responsibility for maintenance, insurance and other building management tasks can be daunting. Hiring a professional managing agent can address the lack of expertise.
A managing agent will take care of day-to-day responsibilities like maintenance schedules, hiring contractors and budgeting. Leaseholders should be careful in choosing an agent, ensuring that they are well-qualified and experienced with RTM properties. Regular reviews and setting clear terms of service can help ensure the managing agent is working in the leaseholders’ best interests.
Conflicts Within the RTM Group
Group dynamics can become challenging in RTM situations. When leaseholders come together to make decisions about the building, differing opinions are inevitable. Conflicts can arise over which service providers to choose, the level of service required or how budgets should be allocated. Disagreements can disrupt the effective management of the building and create tension between neighbours.
Establishing a clear structure for decision-making is crucial. This could mean creating a formal committee with set roles and clear voting procedures. Setting up transparent processes for handling decisions, including voting systems for major changes can help minimise disagreements. Regular meetings where everyone has an opportunity to voice their opinions can also improve communication and reduce the potential for conflict. It is also important to have agreed-upon rules for dispute resolution, so if conflicts do arise then there is a clear path for addressing them.
