Darren Bagnall of Flat Living Insurance discusses what a Right to Manage company is.
Right to Manage companies give leaseholders the chance to collectively take over the management of their block of flats or apartments.
According to LEASE, the Right to Manage was introduced through the Commonhold and Leasehold Reform Act of 2002, which gave leaseholders the statutory right to take over the management of their block from the landlord by setting up a special company: A Right to Manage company.
The Right to Manage is an important opportunity for all leaseholders as it means they can act without the landlord’s permission and make significant decisions within the property. However, with increased responsibility comes increased liability.
Working with a Managing Agent
Directors of Right to Manage companies have a multitude of responsibilities to keep on top of. It is therefore highly advisable for Right to Manage companies to employ a professional managing agent to help handle the day-to-day management of the property.
A professional managing agent will help directors of Right to Manage companies to fulfil their responsibilities, such as:
- Issuing and receiving service charges for all tenants
- Issuing invitations to all leaseholders to join the RTM company
- Managing enquiries and complaints from leaseholders
- Sourcing and handling payment for contractors, site employees (i.e. receptionist/cleaners) and any other suppliers
- Ensuring a suitable insurance policy is in place
- Ensuring directors and officers have adequate liability insurance
- Handling the maintenance programme for the property and undertaking the correct Section 20 procedure for any major works taking place
- Maintaining regular health and safety checks and employing qualified professionals to carry out said checks
What Else Can a Managing Agent Help With?
A managing agent can be especially helpful when it comes to helping you manage your finances. They will help you to understand your annual budgets and what sort of costs you should prepare for, as well as creating expenditure reports for your block’s shareholders.
Creating a budget is an incredibly important part of managing a block; it costs a great deal to successfully fund a multi-home property. This is especially pertinent to a block of flats because the cost for major works (costs which cannot be used from a reserve fund) must be split between the leaseholders. To mitigate these costs – which are often inevitable – financial planning is key.
Maintenance is another essential component of running a successful block, and something your managing agent will be able to handle for you. This includes the employment of on-site staff such as gardeners/cleaners, as well as identifying what services your block will require.
Ensuring the correct maintenance is undertaken at your block will, in the long run, mean lower reparation costs being taken from your annual budget.
