Right to Manage Solicitors

Solicitors Specialising in the Right to Manage (RTM)

The Right to Manage – what is it?

If you are a flat owner, you have the right under the Commonhold And Leasehold Reform Act 2002 to force your freeholder (subject to certain criteria being met) to give you the Right to Manage your own block – either yourselves by setting up a Right to Manage company or by appointing a professional managing agent of your own choosing. And our expert right to manage solicitors can guide you through the process.

Leasehold update – On May 24, 2024, the UK Parliament passed the Leasehold and Freehold Reform Act. But its changes to the Right To Manage have not yet come into effect.
Click here to read the Leasehold Reform Latest News

Got a question about exercising your Right To Manage? Call our specialist RTM solicitors on FREEPHONE 0800 1404544 for FREE initial phone advice – with no strings attached.

The need for specialist Right to Manage Solicitors.

Exercising your right to manage involves some tricky areas of law – and very few solicitors deal with lease extension, freehold purchase or the right to manage on a day-to-day basis. Our leasehold team does – that’s all the five strong team  do. And that’s why over the last 25 years, we have dealt with up to 500 of these cases a year, and in total have helped around 10,000 people buy the freehold, extend their lease or exercise their RTM rights.

But don’t just take our word for it. Our expertise is why

1. We are the sole partners of The HomeOwners Alliance – we are the only solicitors recommended for RTM advice by the only organisation to champion, support and serve Britain’s 17 million homeowners.

2. We are Progressive Approved Solicitors– we are one of only three law firms recommended and formally approved by Progressive Property – the UK’s largest property investment education company

3. We are also members of ALEP (the Association of Leasehold Enfranchisement Practitioners) – the only specialist group for enfranchisement and right to manage solicitors and surveyors.

Why exercise the Right to Manage your block of flats?

There are plenty of strong reasons why leaseholders should consider taking over management rights of their block, including;

• Many tenants become frustrated dealing with a poorly run management company over which they have no control

• Some property management companies and freeholders don’t maintain the property to a sufficiently high standard

• Other management companies can prove very expensive

• Some freeholders fail to account properly and overcharge for the service charge expenditure, which can sometimes give rise to formal service charge disputes

• Poor maintenance and upkeep of your block can make your flat harder to sell and may well reduce the price you can charge significantly

• Some tenants find freeholders failing to comply with health and safety requirements

• Some freeholders prove really difficult to deal with – sometimes uncommunicative and even aggressive and hostile

The practical drawbacks of your Right To Manage

The Right to Manage  is a popular option for many leaseholders and can prove quite effective. However, right to manage has both pros and cons – here are just 4 of the considerable drawbacks which should also be taken into account;

1. Firstly, it is important to remember that RTM can be very limited. A right to manage company can only generate income through service charges which will then be protected for all leaseholders.

2. Although, the management situation is taken care of, the role of the freeholder is not removed completely and their consent will still be needed for lease extensions and work done on the building. And some leaseholders find that having exercised their right to manage, their relationship with the freeholder becomes more difficult

3. Furthermore, the burden of paying the freeholder’s often considerable costs falls squarely with the RTM company (not all lessees). Throughout the year, the Directors of the Right to Manage company will have to spend time on a variety of issues ranging from decisions on how and when maintenance work is required, and liaison and instruction with those carrying out such maintenance work. Depending on the size of the block and how agreeable your fellow leaseholders are to reaching agreement on any work required, this can be hard work and highly time-consuming to say the least

4. You will need to set up and run an RTM company to run the building. This will then take over from the existing block management company hired by the landlord. You must be ready for all the processes and responsibilities that come with being involved in such right to manage companies.

5. You may find that your freeholder tries to block the right to manage. It’s not unusual. Your freeholder may raise legal or procedural objections and in some cases may just fail to respond that all. That’s another reason why you need specialist right to manage solicitors.

The most important thing to remember is that RTM is not an easy option and should be carefully thought through. A Law Commission survey of those who had successfully acquired the right to manage found half of those had experienced difficulties in acquiring the right to manage. Respondents commented on the difficult nature of the process which “took a lot of time” and needed “a lot of dedicated hard work“.

So talk to a specialist leasehold property solicitor to make sure that you do not bite off more than you can chew.

Buying the freehold of your block – the best alternative to RTM?

These drawbacks to the right to manage are quite problematic and we therefore advise clients who are interested in RTM to consider buying the freehold instead as this affords them for greater freedom in the long term. However, whilst buying the freehold of your block (often referred to as freehold, leasehold or collective enfranchisement) is usually desirable,  it can be very expensive and at least half of all leaseholders will need to get involved in the process. If this is too difficult, the RTM can be a decent alternative which enables leaseholders to make service charges much fairer.

Leaseholders should not view RTM as the answer to all of the problems relating to the poor management of their building .They are simply assuming responsibility for all management tasks and cannot fix past mistakes relating to payments for example. They therefore take on a lot of work and may have very limited funding available.

Click here to find out more about how Lease Enfranchisement could work for you.

Click here to read more about the differences between right to manage and enfranchisement

The other alternative to RTM – the Court Appointed Manager

Leaseholders who do not wish to run the block themselves but are dissatisfied with their freeholder’s management have another alternative to exercising the right to management – an application for Court Appointed Manager at the First Tier Property Tribunal (previously known as the Leasehold Valuation Tribunal or LVT)

In order to do this, the freeholder must be served with a notice stating that unless management improves, the Tribunal will become involved. The Tribunal can then instate a managing agent if they are convinced by the leaseholder’s case.

Click here to read more about Court Appointed Property Managers.

Right To Manage Eligibility

To qualify for the right to exercise the leaseholders’ right to manage your block, you will need to fill the following criteria (under the 2002 Commonhold and Leasehold Reform Act)

·         your block must be a mainly residential block. RTM does not apply to purely business leases. However the right may apply provided that no more than 1/4 of the building is used for business purposes i.e. a minimum of 75 per cent of the building should be residential

·         The law states that the building must be self-contained. But if it forms part of bigger structure it should be able to be developed independently

·         The building cannot be a charitable trust.

·         To be a “qualifying tenant”, the flats must be what is referred to as “long leasehold) i.e. originally granted for at least 21 years.

·         At least two thirds of the building must be let to other ‘qualifying’ tenants.

·         50% of the qualifying tenants in the building must want to exercise the right to manage and must become members of the right to manage company

RTM – Do I need to prove that my freeholder or the current managing agents are somehow at fault?

No, there is no need to provide any evidence. Equally you do not need any any application to or order from a court.

In general terms, you simply have the right to take over the management of your block (although in certain very limited circumstances your  freeholder may be able to challenge the exercise of your Right to Manage).

I own two flats in a block of four – can I make an RTM application?

Yes, in those circumstances you are entitled to make an application to take over the right to manage your block even if the other flat owners don’t want to join in. The same applies (i.e. you have a right to apply) if you own both leasehold flats in a block of two.

Do I Really Need Specialist Right To Manage Solicitors?

As there are some quite tricky aspects of the right to manage process, it is definitely worth hiring a specialist solicitor to take you through what needs to be done in exercising your right to manage and setting up your RTM company.

Here are a few of the things your Right to Manage Solicitors can  help you with when it comes to RTM company formation:

• They can tell you whether or not you and your fellow tenants qualify for the right to manage
• They can set up your RTM company and make sure you have the right shareholders agreement – and advise you everything you need to do in order to run a successful company
• They can help you with the paperwork and successfully exercise your right to manage – including;

–  drafting the Notice Inviting Participation that you will need to send to all qualifying leaseholders as well as your current freeholder
–  drafting the Notice of Intent that you need to serve to your current freeholder in order to inform him or her that you intend to acquire the right to manage
–  advising you on what to do following your landlord’s Counter Notice

Not all providers of Right to Manage company formation services are in fact Solicitors – but it is always advisable to seek proper legal advice for your company. Your Freeholder will almost certainlyinstruct a Solicitor to act for them on receipt of the Claim Notice and an experienced Solicitor acting on your behalf will ensure that your interests are also protected.

Practising Solicitors are regulated by the Solicitors Regulation Authority which imposes stringent criteria on Solicitors’ practices under the SRA Code of Conduct.

How much does it cost to exercise my right to manage?

You don’t have to pay your freeholder any sort of premium to exercise the right to manage your block. That means that, unlike extending your lease and enfranchisement, you  do not need to go to the extra cost of reimbursing your freeholder for their loss of interest or in having the block valued by a specialist surveyor.

However exercising the right to manage, your block is likely to incur the following expenses:

• Surveyor fees
• Your costs in setting up a RTM Company, including Companies House registration fees
• Legal fees (for your RTM solicitors)
• Legal fees (for your freeholder’s solicitor)
• Any fees incurred by your freeholder in dealing with the notice
• Accountancy fees
• Managing agent fees (if you decide to appoint external managing agents

The amount of these fees will depend on the size of the building, the number of tenants involved and the response of your freeholder.

Don’t forget that the more tenants involved in the right to manage company, the more the overall cost is divided down.

How Right to Manage works  – the procedure

Exercising your right to manage is a relatively simple procedure. It does not involve getting your freeholder’s consent or applying for a court order. Although there are legal costs involved in forming right to manage companies and in addition the leaseholders must pay the freeholder’s costs in regard to responding to the notice (see below), they do not have to pay the freeholder a fee for exercising their right to manage.

These are the steps qualifying leaseholders must take in order to exercise their right to manage :

Step 1 – Create the company

A RTM company must be created and registered at Companies House. The qualifying leaseholders who choose to participate must become members of the company. The company as to be what is known as ” limited by guarantee” (as there is no share issue). When creating the company the leaseholders involved will have to decide who will become directors and which member will become the company secretary. This information is also registerable.

Step 2 – Inform the other leaseholders

Newly registered right to manage companies should serve notice on the remaining leaseholders in the building inviting them to become members of the company.

The company cannot exclude particular leaseholder. They must invite everyone. The company must wait at least 14 days after inviting the other leaseholders before it serves notice on the freeholder (Step 3).

Step 3 – Serve notice on your freeholder

Notice of the right to manage should be served on the owner of the freehold with details of the right to manage company. The freeholder is given one month to respond to this notice and potentially issue a counter-notice. The takeover date for the right to manage company should be 3 months from the end of the reply period. Therefore the quickest this process can be completed is 4 months from the date of notice.

If the freeholder approves the application then they will have to serve notice on the current management company and any contractors that may work on the building.

Each member of the newly created UK RTM company is joint and severally liable for the freeholder’s costs in dealing with the claim (i.e. each of them are liable for up to the full amount of the those costs).

However, if the freeholder doesn’t respond or simply can’t be located, and the leaseholders receive no response to the claim, this does not mean that they cannot proceed with the right to manage action. They must, however, he able to prove that they took all reasonable steps to contact the freeholder and have had no success. They must then bring the claim before the First Tier Property Tribunal  which should grant the right to manage accordingly.

Step 4 – Receipt of a counter-notice

The freeholder must have sufficient reason to deny the right to manage claim and serve a counter-notice. A good reason would be that the building does not qualify for the right, or not enough leaseholders have signed up as members of the company.

If the freeholder does return a counter-notice they could dispute the claim to the right to manage. Unfortunately, this normally results in taking the claim before the Tribunal which will delay the process significantly. Fortunately although it is relatively unusual, bringing a matter before a Tribunal can significantly add to costs – in particular as the Tribunal is in effect a court, most leaseholders are reluctant to represent themselves and usually instruct specialist solicitors on their behalf.

Step 5 – Serving an information notice

Before acquiring the right to manage, participating leaseholders must collect all the necessary information from the freeholder about the property so that they can ensure effective management of the building. This involves serving an ‘Information Notice’ on the landlord for them to respond to. It is also normal practice at this time to instruct a surveyor to examine the building.

How long will it take to exercise the right to manage?

There is no hard and fast time for the right to manage process.

However if everything ran smoothly, then your right to the management of the building could begin 4 months after the creation of the company.

This time period can be delayed by factors such as organisation of your fellow leaseholders when creating the company, getting a surveyor to examine the building and produce a report, and the freeholder issuing a counter-notice which means you have to apply to the First Tier Property Tribunal. And our right to manage solicitors can only go as fast as the slowest party involved allows them to.

Click here to read more about how the First Tier Property Tribunal works.

Can the freeholder object to our RTM claim?

As it is a statutory right your landlord’s consent is not needed order to exercise your right to manage.

However, when your freeholder has received the claim notice, they have three main options:

• Not to respond to the claim
• To issue a counter-notice to accept the claim to RTM
•  issue a counter-notice to dispute the claim to RTM

But in reality there aren’t many disputed right to manage claims. And that’s for the simple reason that, of course, for qualifying leaseholders, RTM is a legal right and there are a very limited number of grounds on which a freeholder can object. An the grounds for your freeholder disputing your claim are limited to just the following 3 reasons;

• the building itself does not qualify; or
• the right to manage company fails to comply with the legislative requirements; or
• RTM company members don’t represent 50% of the flats in the block

Will our freeholder remain involved in any way?

Yes, your freeholder will still need be consulted on certain decisions and can become a member of your RTM company if they wish to.

Does exercising our rights perfect the ownership of the block in any way?

No – RTM simply gives you management of the block. Your current freeholder remains the owner.

Getting support for the project from fellow leaseholders

The 1st step is actually identifying who owns the other flats. That’s usually not a particular problem with smaller blocks, but when it comes to larger blocks or estates – especially those with 50 and above flats – even contacting the leaseholders can be tricky. Remember that the right to manage is not a right for residents. it belongs to the owners of long leasehold flats who may have course be renting out to tenants.

If this applies to you, to make your life easier, here are some practical tips on obtain the contact details for qualifying leaseholders;

• ask the existing Residents Association
• enquire of the managing agents or freeholder
• put up posters, pop notices through every letterbox or simply knock on doors
• search for details of each and every leaseholder at the Land Registry

Is it best to appoint an organiser or spokesperson?

Forming a right to manage company involves multiple leaseholders, but it can be a good idea to have a designated contact who deals with the RTM solicitors – especially in larger blocks where more leaseholders are involved.

In our experience, this helps to avoid confusion and set out a clear line of communication. It’s good business practice that will serve you well for the future.

If you do appoint an organiser, then 1 of their biggest challenges may be to manage expectations. The RTM process can be slow. Many people have little or no idea how long the process will take. Research by the Law Commission show that some people believe the whole process would only take a few weeks. Keeping your fellow leaseholders on board throughout the project is key – so make sure they don’t underestimate how long the process is likely to take.

Setting up an RTM company

In acquiring the right to manage your flats, do bear in mind that you will need to create a limited company. This limited company will become legally responsible for the management and maintenance of the block.

Right to manage companies have to be limited by guarantee. This involves having a prescribed form of constitution to cover issues such as voting rights. They must be registered at Companies House.

How many directors does a Right to Manage Company need?

According to the Companies Act 2006, a company must have at least one director, but an RTM company should have at least two directors. That’s important because having more than one director will ensure that the company continues to function if one director becomes unavailable, unable to act or resigns. It also helps to ensure management continuity.

In practice it’s common for there to be between 3 and 5 directors.

Directors don’t have to live in the block. However it often a good idea to ensure that the majority of directors are residents – so that practical management of the block is mainly handled by those leaseholders who live there and experience practical management issues daily.

What responsibilities do members of the RTM company take on?

In addition to legal requirements in administering your company, and in providing proper accounts, there are also a significant number of regulations affecting the upkeep of your block.

It’s very important that you understand these and make sure that these are regularly carried out. If you think there’s any risk that you and your fellow RTM company members will be unable to always arrange this on time, then it may will be worth looking to pointing external managing agents, who should cover all these tasks for you.

As the right to manage company will function like an ordinary company, the directors will have all the responsibilities a normal director would have as well as maintaining the landlord’s covenants

You will need a Board of Directors for the company (usually made up of qualifying leaseholders), who will oversee the company’s day-to-day management. It is therefore particularly important, when considering exercising the right to manage, to identify leaseholders who are willing to take on this level of responsibility and commitment.

Here are some of the most important of those responsibilities:

• Like any landlord, the company should comply with the government approved Code of Management Practice
• Ensuring that your RTM company stays solvent – which may involve directors or members funding the shortfall when other tenants do not pay their monthly contribution on time. It will also need a tight fundraising strategy – to make sure that sufficient monies are raised to keep up with a satisfactory level of block maintenance
• Day to day running of the right to manage company, including holding regular directors’ meetings and an AGM.
• Right to manage companies will need to be registered at Companies House, maintain  comprehensive accounts and submit yearly returns. It would normally also need to have Articles of Association drawn up – something your solicitor can help you with
• Setting and collecting in service charges and, where appropriate, sinking funds
• Testing electrical wiring in communal areas on a regular basis
• Arranging building insurance that covers everything that it needs to and confirmation of reinstatement values – you might also consider directors and officer’s liability insurance
• Making sure that communal areas have regular Health & Safety assessments where necessary
• Ensuring safety and regular maintenance of lifts in the building.
• Assess the fire risk to the building.
• Arrange frequent inspections of the fire alarm systems and fire safety equipment.
• Consider arranging an asbestos survey and an awareness of its outcomes for employing contractors
• The company must honour any obligations the landlord has in the tenant’s leases, i.e. to fix repairs within a certain time to a reasonable standard.
•  The company has an obligation to keep the landlord informed when a tenant breaches the terms of their lease.
• Handling lease enquiries and complaints. This can often be difficult because those enquiries or complaints will come from 1 of your neighbours. You may even need to take action to enforce the terms of 1 of your neighbour’s leases

NB The new company does not take on responsibility for any action relating to forfeiture and possession of the lease. That responsibility remains with the freeholder. But any planned developments of any part of the property must be voted on by the RTM company’s members, which may include the freeholder.

In setting up an RTM company, do we have to manage the block ourselves?

No – whether you just feel like you need a bit of support, or want to delegate the entire management of the block, one option is to appoint a managing agent.

Professional block managers can take over as much of the management as you wish to pass. Particular with larger blocks, handing over control to a professional block management company can take much of the pressure off you. And don’t forget, you have complete control over the appointment of the management company – therefore, subject to any contract you have with them, you are entirely within your powers to remove them and take on responsibility for self-managing your block, or appoint an alternative block manager.

NB depending where you live, we have an extensive network of contacts with good reputable block management companies. Our right to manage solicitors are more than happy to introduce 1 of them to you.

Getting hold of the right documents

It is essential that the RTM company or the newly-appointed managing agent has access to information related to the building – such as the contracts and copies of counterpart leases that existed before the RTM was obtained, as well as accounting records. These books and records will need to be thoroughly checked and updated periodically.

It is important to note that certain contracts and leases may need to be renewed by the company that has recently obtained the Right to Manage.

What happens to the existing contracts negotiated by the freeholder when we exercise the right to manage?

Taking on the Right to Manage your block automatically terminates your freeholder’s existing contracts. The members of the new RTM company are however perfectly entitled to let some or all of those existing contracts continue if they wish. And with regard to some contract like those for insuring the block and cleaning common parts it may prove easier to temporarily continue with those existing contracts while you come to grips with your new responsibilities. But this is another reason why participating RTM leaseholders really need to be on the ball from day one.

NB, it’s worth noting that it is the duty of your freeholder to make sure that everyone has adequate notice of those contracts by serving a series of contract and contractor notices.

What happens to sinking or reserve funds when we exercise the right to manage?

A sinking fund is form of reserve fund for future maintenance –monies set aside to cover any major works which may be required on your block in future.

All leaseholders’ monies (whether they are reserve or sinking funds or other monies retained for future maintenance), including any interest, which are held by your freeholder or current block manager will be transferred over to the new manager on the day the RTM goes through. The landlord must also pay off any outstanding bills, as well as transferring revenue from service charges to the RTM company when they acquire the right to manage. The landlord should also show the UK RTM company the block’s accounts.

It’s worth noting that the freeholder is entitled to deduct any monies owing to them for payment for services up to the date of acquisition.

NB in practice, it’s not unusual for the freeholder or outgoing block manager to hold back a small sum until the accounts have been audited.
Click here to read more about leasehold sinking funds and service charges

The financial responsibility of  a right to manage company – a warning

From the very moment of right to manage company formation you are liable, along with the other participating leasehold, for any shortfall in the accounts. It is critical that you understand this.

For example every leaseholder will need to continue paying a service charge,  just as they are at the moment. But if one or more leaseholders fall behind with those payments, and that cash is urgently needed, you could become liable for covering that shortfall until you can recover the service charge. This not only applies to any director of the RTM company, it also applies to the other leaseholders who are involved in exercising the right to manage.

Also be aware that when running an RTM company, it can sometimes be difficult to maintain the kind of previously friendly relationship you may have experienced with other residents of your block – for example if you have to chase them for unpaid service charges or if they feel you’re not maintaining the block up to the standard they expect themselves.

Missing freeholders –  how our right to manage solicitors can help

If the freeholder is absent and simply can’t be found, there is a solution. That involves an application to the First-Tier Tribunal (Property Chamber) for an order which enables the RTM company to exercise the right despite the absence of the freeholder. Our experienced RTM solicitors regularly deal with both absent landlords and the First Tier Property Tribunal and can help you make that application.

Can we register our Right to Manage?

Yes, where an RTM company has exercised their right to manage, it can make an application to the Land Registry for an entry on the Proprietorship Register using form AP1.

When does the Right to Manage end?

There are no time limits on your rights to manage, but there are circumstances in which right to manage companies stop being entitled to exercise the right to manage your building, namely:

• Where all leaseholders and the right to manage company wants to give up exercising the right to manage.
• Where the right to manage company becomes insolvent, is wound up, enters into receivership or is struck off
• Where the company stops acting as a right to manage company (eg if the company is used, under the enfranchisement process, to buy the freehold of the building).

What happens if the RTM Company has ceased to exist?

In this case, if the freeholder finds out, they don’t have to do, but do have the ability to apply to take back the management rights from the RTM Company.

Is RTM the same as a Residents Management Company?

No – the two are completely different.
Click here to read about the Difference Between An RMC And RTM Company

Does exercising my right to manage give me any right to extend the lease on my flat?

No, – and that’s because in taking over the right to manage, you’re not actually acquiring any further legal interest in the property – but as the holder of a long lease (i.e. one originally granted for at least 21 years) you are (in the vast majority of circumstances) entitled to extend your lease by a further 90 years, though this comes with a cost.

Click here to read more about how lease extensions work.

The main alternative to RTM, buying the freehold of your block, does allow you to automatically extend your lease to 999 years without further payment.

Does a right to manage company have the right to buy the freehold?

The answer is no. Instead of purchasing the freehold, Right to Manage just merely gives the participating leaseholders the legal capacity to manage the block. Buying the freehold is a quite separate process – see above.

It’s worth noting that if you are thinking of buying the freehold, but you can’t go ahead at this stage (either because you don’t have enough participating leaseholders or summer all of those leaseholders don’t have the available funds to buy the freehold), it’s not unusual for people to exercise the right to manage as a 1st step, with a view to buying the freehold at a later date. The big disadvantage with this, however, is not only will the cost of buying the freehold be likely to rise as your lease get shorter, but you will to pay 2 sets of legal fees etc in both exercising your RTM and buying the freehold.

But equally, if you do have enough leaseholders who are prepared to join in the freehold purchase project, and between you have enough money to do so, freehold purchase or enfranchisement is often a better choice than RTM – simply because the control of your block you gain by buying the freehold includes that right to manage.

Exercising our RTM – Do we have to invite all the other flat owners to join in?

Yes. Every flat owner that meets the criteria must be invited to participate in claiming the Right to Manage. If they choose to participate they must then become members of the Right to Manage or RTM company.

Tenants eligible for collective enfranchisement are also eligible for the Right to Manage, under most circumstances.

Does anybody who buys a flat after the right to manage is exercised automatically become a member of the RTM company?

No. As a UK RTM company is limited by guarantee rather than limited by shares, when a participating flat is sold the RTM company is under no obligation to issue shares to the new tenants.

I own a long leasehold house. Can I claim the right to manage?

No, the right to manage does not apply to leasehold houses. The alternative, in most circumstances is to exercise your right to buy the freehold  of your house entirely.

Exercise your right to manage – it really can improve things

According to the National Leasehold Survey, carried out back in 2016 by The Leasehold Advisory Service,  the majority of leaseholders surveyed were pretty disappointed with the level of management carried out by the block manager – and those that had exercise the right to manage notice improvements.

Amongst the significant findings of the survey, which involved 1,244 leaseholders, including 181 residential management company directors, were the following:

• 57% of leaseholders admit they regret buying a leasehold property
• Around 2 in every 3leaseholders felt that they did not receive a good level of service from their block manager –  with just a remarkable 6% “very confident the managing agent could resolve issues”.
• In contrast, 68% of leaseholders said they had little or no confidence that their current block manager was able to sort out issues efficiently
• 51% believed that a different managing agent would produce improvements and benefit the block.
• Around 20% of leaseholders surveys, simply did not know that they have the legal power to appoint a better performing managing agent.
• 40% of leaseholders felt strongly that their service charge was not good value for money
• Around 20% of leaseholders surveys, simply did not know that they have the legal power to appoint a better performing managing agent.

This survey followed an earlier 2013 report by Livingcity Group, a property asset management business based in the North West, which broadly found similar views about their block management amongst flat owners in England and Wales. These findings probably explain why nearly half of those surveyed would support residents managing the block. Worryingly, this report also found that 3 in 10 respondents claimed they had not received sufficient advice prior to purchasing their flat – meaning they did not know the extent of their leasehold obligations and rights.

Exercising Your Right To Manage – How Do I Pick The Right Managing Agent?

When you acquire the right to manage, you can opt whether to manage the block yourselves or to appoint a professional property managing agent of your own choosing.

It is very important that you invest time in finding the right managing agent as this can influence the value of the properties in your building. Here is some practical advice on finding the right one:

• Ask how the managing agent’s team is structured and their level of expertise

• Find out how they communicate with residents, e.g. via a bulletin board, by letter or online

• Enquire if there is a structured accounting and reporting system in place and request examples which demonstrate how your money will be spent

• Check if they carry out regular inspections and can reassure you that they will be monitoring problems and checking monthly

• Check if they hold memberships of any professional organisations such as ARMA (Association of Residential Managing Agents) whose members have to satisfy an independent body of their competence. AMRA is also the only body in England and Wales to focus exclusively on the management of residential leasehold blocks of flats

• Check if you will be given an out of hours contact number for emergencies

• Check if you will have a dedicated account manager for your building

• Choose a service tailored to the needs and expectations of you, the tenants and the building

• Develop a good working relationship with the agent as this is key to the successful ongoing management of a building

• Do your research on contractors, utilities providers, etc. for the block to ensure you are getting the best possible service and value

• Enquire about what types of properties the agent currently manages and their similarity to yours

• Ensure that you communicate your requirements to the agent so they can manage your expectations and supply you with the relevant information

• Find out if the agent has many other properties to manage and if they have the time to adequately manage yours

• Find out if they communicate well and regularly with the residents of their properties

• Speak to the agent’s current clients and ask them to rate their performance and take  references – word of mouth is the most effective and reliable benchmark of a firm’s reputation

 

FAQs

What is the right to manage issues?

You and your fellow leaseholders may be entitled to take over the management of your freehold.

Issues you need to be aware of include:

• You must follow the correct procedure when exercising your right to manage
• You must be prepared to take on the management work, including:
o Setting the amount of service charges
o Collecting service charges, including late payments
o Dealing with enquiries from leaseholders
o Arranging buildings insurance
o Dealing with repairs and maintenance
o Ensuring regular payments are made into a sinking fund to pay for large items of future expenditure
o Preparing annual accounts

Is right to manage a good idea?

Whether taking on the right to manage will be beneficial usually depends on several factors, including:

• How many flats are in the block and whether other leaseholders want to join in with the flat management
• How well your freeholder is currently managing the property. If they are doing a good job, you might not need to take over from them. However, if the management is poor, repairs are not done on time and you feel your landlord is overcharging you for services, you and your fellow leaseholders may benefit from having the right to manage your block
• Whether you feel that you and your fellow leaseholders get along well enough to deal with the management together
• Whether you are prepared to pay a managing agent to deal with the administration on your behalf

What is a right to manage claim?

If you and the other leaseholders in your block of flats are eligible, you can claim the right to manage from the freeholder. They will still own the freehold and deal with matters such as consent to alterations and lease extensions, but you and the other participating leaseholders will be responsible for management issues such as collecting service charges, paying bills and arranging maintenance.

What is the right to manage regulation?

The Commonhold and Leasehold Reform Act 2002 sets out who is eligible to take over the management of leasehold premises, as follows:

• Two-thirds of the flats must be owned by long-leaseholders, ie. those with leases of at least 21 years
• At least half of those with long leases must want to take part in the right to manage process
• If the property only has two flats, both leaseholders must want the right to manage
• The building must be at least 75% residential
If there are four flats or less and the landlord lives in the building, then there is not usually a right to take over the management.