Company records show that there are over 60,000 registered Residents’ Management Companies and a high proportion relate to flats. The highest concentrations are in the South East, South Coast, Bristol & Bath areas, Home Counties, South Midlands and the North West.
A Residents’ Management Company (RMC) protects the interests of the leaseholders. RMC’s typically manage common parts of the building although they may have other responsibilities. Your property probably has parts common to all the flat owners living in it: boundaries, roofs, halls, drives and gardens being typical examples. These all require maintenance, insurance, lighting, etc.
Monies for day to day requirements will be collected within your service charge requests, however additional monies may be required for larger projects, i.e. replacement roof, the individual flat owners usually fund these costs, by making periodic contributions into a reserve fund.
The RMC’s are run by directors, who are usually unpaid and appointed from the residents themselves.
The RMC will have a Memorandum and Articles of Association specially drawn up to allow the company to own, manage and administer a leasehold or freehold property, which is normally divided into several dwelling units or flats, with each leaseholder owning a share in the company. The leaseholder will be obliged to transfer the ownership of the share to the new leaseholder when disposing of the property.
The characteristics of RMC’s
The majority of RMC’s are limited by share, although some blocks favour limitation by guarantee.
A formalised RMC is very different from an informal residents association: it carries legal status and offers greater protection to all involved. But setting up an RMC can be complex.
Although Property Law regulates matters related to long leasehold tenure, Company Law regulates the setting-up and operation of flat management companies
Companies may employ a professional managing agent, expert in technical aspects of managing flats and understanding the legislation and regulation required to effectively manage a block of flats or apartments.
