What is a rtm company?
An RTM stands for a Right to Manage Company. It is quite common for a developer or Freeholder to appoint their chosen managing agent when the last flat is sold in the block of flats. If this managing agent is perceived by the residents to be inadequate, expensive or generally not fit for purpose then the residents by Law have the right to form their own RTM Company after which they can appoint a managing agent of their choice. There are specialist legal firms that normally assist in this process. Ringley Law are one of these companies that form part of the Ringley Group which specialise in all things related to block management.
IF YOU ARE A FIRST TIME BUYER OWNING AN APARTMENT MAY BE CONFUSING BY ALL THE LEGAL JARGON ASSOCIATED WITH IT LIKE RMC, LANDLORDS, FREEHOLDERS, HEAD LESSORS, LEASEHOLDERS, MANAGING AGENTS blah blah blah...
SO WHAT IS AN RTM COMPANY?
Block Management is normally associated with those duties the landlord has to perform as per the lease that relate to the maintenance of the building and the legal governance of the property. In reality this means the collection of service payments to pay for maintenance works and services while being directly accountable to the leaseholders of the block.
Having the right to manage means that the leaseholders can force the landlord to give them the collective power to assume block management responsibilities through a limited company. This gives leaseholders far greater control over how their money is spent and what happens in the building.
DO I OR WE QUALIFY FOR RTM?
Not all blocks will qualify to form a Right to Manage Company. To qualify the block must :
be at least or partly self-contained
have a minimumof 2 leasehold flats within the block
will have no more than 25% floor area which is classified as non-residential
have at least two thirds of the owners with leases longer than 21 years
50% (or more) of the qualifying leaseholders should also be in willing of becoming a member of the RTM Company.
HOW EASY IS IT TO GO RTM?
Two crucial legal notices must be served in accordance with relevant legislation to ensure the RTM Company is compliant in Company Law. There are also aspects with the land registry that need to be addressed.This is a fairly complex process and you should look to appoint a professional firm to succeed.
HOW LONG DOES IT TAKE TO FORM AN RTM?
In the majority of cases an RTM application will take about 6 months from start to finish. It may well take longer if the Freeholder decides to contest your application.
IF WE HAVE A RTM COMPANY WILL WE STILL NEED A MANAGING AGENT?
Yes in most cases, this is adviseable as you are now Directors and need to be protected in all aspects of block management.
When the RTM process has been completed, the Directors of the RTM Company (usually volunteer leaseholders) will then immediately have the burden of block management responsibilities for the entire building to deal with and all legal aspects to mitigate against potentially. Having a professional managing agent on board to assist with billing, legal issues and maintenance matters but we recommended that the Directors maintain an overview of their managing agent and ensure that important matters such as setting the service charge budget are agreed with all residents and Directors.
SHOULD WE EXERCISE THE RIGHT TO MANAGE WILL OUR SERVICE CHARGES GO DOWN?
Not necesserily but you will have total conrol and ultimate responsibility.
Many Landlords charge well above the market rate for some services which is down to their indifference to leaseholders. Exercising your RTM will then give leaseholders the opportunity to re tender certain aspects and services and in some cases achieve coste efficiencies.
Buildings Insurance levels is normally a quick win. In some cases Landlords may have been under investing in the block meaning that resident directors may feel an increase in their service charges is appropriate to get the building back up to standard.
In either case, the value of control is the main benefit to the leaseholders.
TO CONCLUDE
Maintaining a block or estate through a Right to Manage Company is a popluar, democratic and more importantly transparent (!) form of block management than the archaic Landlord controlled model.
Do note the RTM Company will be subject to a written constitution andneeds to be transparent with it's book keeping and finances. Also all leaseholders have the right to be elected to the board of directors of the RTM company. We recommend an AGM (Annual General Meeting) to happen annually to air views and re-elect directors etc
If you want to move forward successfully with the RTM process do fill out the form on this page and we will contact you within two hours.
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