Understanding the Right to Manage: Taking Control of Your Building

In the UK, providing that buildings and leaseholders meet the criteria, leaseholders have a legitimate right to form a Right to Manage (RTM) company to take over building management from the landlord or the existing property manager. Exercising the Right to Manage is a complex process with long-term implications, and leaseholders must understand that setting up an RTM company involves significant responsibilities. Before moving forward, they should consider both the advantages and challenges of RTM.

Why Leaseholders Should Consider the Right to Manage Option

Typically, a freeholder’s chosen property management company oversees the communal areas of the building. However, disputes often arise due to excessive servicechargesorted.co.uk/blogs/service-charge-disputes-what-cam-be-disputed-how-and-the-role-of-the-first-role-tenancy-agreements-made-easy'>planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>tribunal'>service charges, mismanagement, or poor communication. Leaseholders can explore the Right to Manage option to address these concerns. Setting up an RTM company enables cost savings and allows leaseholders to gain financial control over building management.

RTM empowers leaseholders to make collective decisions that prioritize the interests of all members. Managing the building independently ensures a dedicated service rather than relying on an overburdened property manager responsible for multiple buildings. Additionally, leaseholders can appoint contractors of their choice, ensuring that maintenance and service agreements align with their needs and budget.

Key Benefits of Right to Manage: Savings, Control, and Transparency

Subpar building management is a widespread issue in the UK, affecting many leaseholders. The Right to Manage provides a solution for those experiencing problems with their property management company. The Commonhold and Leasehold Reform Act of 2002 introduced RTM legislation, allowing leaseholders to assume building management responsibilities without needing to prove mismanagement by the existing management company or landlord. Leaseholders also do not require the landlord’s permission to exercise their right.

By setting up an RTM company, leaseholders gain the authority to levy and collect service charges, maintain communal areas, and oversee essential tasks such as cleaning, gardening, and electricity management. Additionally, RTM companies are responsible for organizing health and safety compliance, including fire risk assessments. RTM can lead to cost savings since leaseholders no longer need to pay for an external property management company unless they choose to appoint one

How to Set Up an RTM Company and Take Charge of Building Management

Setting up an RTM company requires careful planning and adherence to legal procedures. Leaseholders must ensure that their building meets eligibility criteria, including a minimum number of qualifying leaseholders. The process typically involves:

1. Gathering support from fellow leaseholders and forming a majority consensus.

2. Serving a formal RTM notice to the landlord.

3. Registering the RTM company and appointing directors.

4. Taking over management responsibilities, including financial planning, contractor selection, and compliance monitoring.

Proper coordination and expert advice are essential to ensure a smooth transition to RTM and the efficient management of building operations.

Challenges of Right to Manage: What Leaseholders Need to Know

While RTM offers numerous benefits, it also comes with significant responsibilities. Leaseholders taking on property management tasks may face challenges such as:

• The time-consuming and demanding nature of building management activities.

• The need to appoint and coordinate contractors while ensuring they are qualified, insured, and cost-effective.

• Ensuring that repairs and maintenance are completed promptly.

• Arranging appropriate building insurance.

• Staying compliant with evolving property management legislation.

Running an RTM company can be stressful, whether leaseholders manage the building themselves or hire a managing agent. Additionally, changes in leaseholders can impact the smooth functioning of the RTM company. Seeking expert advice can help leaseholders navigate these challenges effectively

Making RTM Work: Best Practices for Successful Building Management

For RTM to be successful, leaseholders must establish clear communication and collaboration. Best practices for managing an RTM company include:

• Ensuring all leaseholders are informed and engaged in decision-making.

• Appointing knowledgeable directors with property management experience or seeking professional guidance.

• Maintaining transparent financial records and servicechargesorted.co.uk/blogs/service-charge-disputes-what-cam-be-disputed-how-and-the-role-of-the-first-role-tenancy-agreements-made-easy'>planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>tribunal'>service charge budgets.

• Regularly reviewing contractor performance and service agreements.

• Staying updated on legal and compliance obligations.

By following these best practices, leaseholders can make the most of their Right to Manage and ensure the smooth operation of their building while maintaining financial and operational control.