Long before Brexiteers started talking about taking back control from the EU, leaseholders in England and Wales had much more modest ambitions: to take back control of their buildings. And in 2002, they got it. Introduced under the Commonhold and Leasehold Reform Act 2002, the Right to Manage (RTM) is a powerful legal tool for leaseholders in England and Wales, allowing them to take control of the management of their building without having to purchase the freehold.
It can be used where leaseholders want to explore alternative options to manage their block, often because they consider that it is being poorly managed or service charges have become excessive. If done correctly, RTM can deliver several key benefits:
- Control Over Management
Leaseholders can make decisions about who to appoint as managing agent and which suppliers are used for maintenance, repairs, and services (e.g. cleaning, gardening, or security), rather than relying on the freeholder’s appointed managing agent and their preferred suppliers. If the property is currently poorly managed or service charges are unreasonably high, RTM can offer a way to improve the building’s maintenance and reduce costs.
- More Transparency and Accountability
With RTM, you can ensure that decisions about maintenance and services are transparent, and you have greater control over how service charges are spent. This can help avoid disputes over unclear or inflated costs from managing agents or freeholders.
- Improved Maintenance and Standards
If the building has been neglected, RTM allows leaseholders to prioritize repairs and improvements that enhance the living conditions. Leaseholders can choose reputable contractors, ensure regular maintenance is carried out, and avoid the risk of deterioration that could devalue their property.
- Potential to Reduce Costs
Some leaseholders find that taking over management can reduce service charges because they have more oversight over what is being spent. By comparing different agents or contractors, RTM companies may identify saving opportunities. However, it’s essential to balance cost-cutting with maintaining the building’s quality and safety.
Eligibility
Whilst RTM may sound straightforward, there are several pitfalls that RTM companies and leaseholders often encounter. Understanding these common challenges can help avoid costly mistakes.
One of the first hurdles is ensuring that the building qualifies for RTM. For a successful claim, the building must:
- Consist of two or more flats.
- Be self-contained, meaning it’s structurally detached or capable of being managed separately.
- At least two-thirds of the flats must be leasehold with leases that were originally granted for more than 21 years.
Moreover, over 50% of the qualifying leaseholders must be willing to join the RTM company. Buildings used primarily for commercial purposes, or with a majority of non-residential space, may not qualify. Not checking these qualifications can lead to wasted time and resources if the claim is invalid.
Missing deadlines or providing inaccurate information can result in delays or even the failure of the RTM claim.
The notice to the freeholder must be in the correct format and include specific details. Errors in this notice can lead to legal challenges, forcing the RTM company to start the process over again, which could significantly increase costs.
Responsibilities Once RTM Is Achieved
Once an RTM company takes over management, they are responsible for handling:
- Building maintenance and repairs.
- Insurance.
- Services such as cleaning, gardening, and communal facilities.
the freeholder retains ownership of the building’s freehold and some responsibilities. There might still be ambiguity regarding specific areas of responsibility, for example external areas if a site contains more than one block and establishes more than one RTM company; or it it is part of a wider estate where an estate charge for estate wide communal areas will still remain. Where appropriate, seek specialist advice, and work through these issues in collaboration with the freeholder whenever possible.
Conclusion
RTM comes with responsibilities and potential challenges, particularly in terms of managing the building effectively or navigating legal disputes with the freeholder. It requires perseverance and organisation to see it through. However, in most cases, the transparency, savings and accountability that flow from taking back control via RTM are worth persevering for.
About
Placekeeper Management is a customer focussed managing agent, managing great places for the benefit of communities across the North of England.
Contact
T: 0161 531 6422
