The Right to Manage (RTM) in the UK leasehold system grants leaseholders of residential properties the legal right to take over the management responsibilities of their building from the landlord or managing agent. This process empowers leaseholders to collectively manage the property’s common areas, such as staircases, communal gardens, and shared facilities, without having to demonstrate any fault on the part of the landlord.
The Process of Right to Manage:
1. Eligibility:
- To qualify for the Right to Manage, leaseholders must meet specific eligibility criteria:
- The building must be predominantly residential.
- At least two-thirds of the flats must be held on long leases (usually more than 21 years).
- At least 50% of the leaseholders must agree to participate in the RTM process.
- The building must meet the legal definition of a “qualifying building” under the Commonhold and Leasehold Reform Act 2002.
2. Formation of a Right to Manage Company:
- Leaseholders interested in exercising their Right to Manage must form a Right to Manage company (RTM company) to act as the new management entity.
- The RTM company is typically registered as a private limited company and comprises participating leaseholders as its members and directors.
3. Notice of Claim:
- The RTM process begins with the serving of a formal Notice of Claim to the landlord or managing agent, notifying them of the leaseholders’ intention to acquire the Right to Manage.
- The notice must be served by the RTM company and comply with the statutory requirements set out in the Commonhold and Leasehold Reform Act 2002.
4. Response from the Landlord:
- Upon receiving the Notice of Claim, the landlord has a specified period (usually one month) to respond.
- The landlord can either consent to the RTM and transfer the management functions to the RTM company or dispute the claim by challenging its validity or compliance with legal requirements.
5. Negotiation and Resolution:
- If the landlord consents to the RTM, the management functions are transferred to the RTM company, and the leaseholders assume responsibility for managing the property.
- If the landlord disputes the claim, the matter may proceed to the First-tier Tribunal (Property Chamber) for adjudication, where a decision will be made based on the evidence and legal arguments presented by both parties.
6. Management Handover:
- Once the RTM is acquired, the RTM company assumes responsibility for managing the property’s common areas, including collecting service charges, arranging maintenance and repairs, and ensuring compliance with legal and regulatory requirements.
Benefits of Right to Manage:
- Greater Control: Leaseholders gain greater control over the management of their property, allowing them to make decisions that directly affect their living environment.
- Improved Services: RTM can lead to improved service standards and efficiency, as leaseholders are often more invested in maintaining and enhancing the property’s value.
- Cost Savings: By eliminating managing agent fees or reducing them through more efficient management practices, RTM can result in cost savings for leaseholders.
Conclusion:
The Right to Manage empowers leaseholders in the UK to take control of the management of their residential property, providing them with greater autonomy, control, and accountability over the upkeep and maintenance of their living environment. By following the prescribed process outlined in the Commonhold and Leasehold Reform Act 2002, leaseholders can collectively acquire the Right to Manage and establish an RTM company to manage their property’s common areas in their best interests.