Written by Jodie Fraser, Managing Director of Fraser Allen Estate Management.
What you need to know about the Right to Manage process and how Leaseholders can take control of the way their building is looked after.
High service charges, delays with repairs or terrible communication seems to be the main reason why leaseholders wish to take control of their development, make their own decisions and if they wish, appoint the managing agent that best suits their needs.
You should know that Right to Manage (RTM) is a statutory right and can be exercised by serving a formal notice on the freeholder and any other relevant parties. There is also no need for leaseholders to prove mismanagement by a landlord or their agents but often when leaseholders take this route, they are usually unhappy with the current situation and are keen to make a change.
Exercising the leaseholders’ right to manage is relatively straightforward
The landlord’s consent and an application to the court is not required, however, a majority of the leaseholders must be in favour. The other main right to manage qualifying criteria are:
At least two-thirds of the flats must be let to “qualifying tenants”, i.e., leaseholders whose lease was originally granted for a term of more than 21 years.
While part of the building can be commercial, the non-residential part cannot exceed 25% of the building’s total floor area, excluding common parts.
If any qualifying tenant is the tenant of a local housing authority, right to manage does not apply.
Right to manage does not apply if the premises fall within the Resident Landlord Exemption. To satisfy this exemption:
- the premises must not be a purpose-built block (so, for example, it might be a converted house); and
- must not comprise not more than four flats; and
- at least one of the flats must have been occupied by the landlord (or an adult member of their family) as their only or principal home for not less than the last twelve months.
Right to Manage Company and Company Directors
You will need to exercise your right to manage through a right to manage company, which is formed by the leaseholders. You should be aware that once the right to manage has been acquired by the leaseholders, the landlord is entitled to membership of the right to manage company. This however does not give the landlord any more than 1 vote.
Volunteers must also be found to serve as officers of the right to manage company. They will not only have the usual responsibilities of company directors, but also those of residential property landlords. This can seem very overwhelming, but with good advice and support it is very straightforward.
What to do next
If you’re thinking of taking the next step, the first thing to do would be to ensure you have enough qualifying tenants to move forward.
Talking to a Managing Agent such as Fraser Allen Estate Management at the early stages of this process is advisable so we can advise you on whether you satisfy the qualifying criteria and, subject to that, guide you through the procedure.
