STEP 1

To begin with, we recommend sending a letter explaining your intention to form an RTM company and the reasons why you feel this would be beneficial to you and your fellow leaseholders at the block.

To make things easier we have drafted a newsletter template & questionnaire (MS Word) designed for this purpose. (Open the document and save it to your computer.)

Leaseholders should reply to the letter indicating whether they DO or DO NOT wish to participate and whether they are inclined to contribute towards the cost of exercising the Right To Manage.

Use the RTM Cost Calculator to estimate the cost of acquiring the Right to Manage in your block.

If you feel ready to take control of your home the next step is to form a Right To Manage company.

STEP 2

Having assessed the level of support for RTM in your block it is time to form a RTM company. This is a simple process, requiring the co-operation of just two leaseholders. The Leasehold Guidance Service can administrate this immediately.

Contact us now to set up your RTM company

What is an RTM Company?

A 'right to manage' (RTM) company is a recognisable legal entity created to manage an estate.

It is necessary prior to a RTM application for a RTM company to be set up. This is a properly constituted legal company in which those participating Leaseholders become members.

A Right To Manage company set up in accordance with the Commonhold and Leasehold Reform Act 2002 is the only way to exercise the Right To Manage. Naturally, other arrangements (such as buying the freehold) are possible but these do not benefit from the regulatory structure provided by the Act.

The RTM company must be limited by guarantee (as opposed to shares) and should bind Leaseholders to the compulsory Memorandum of Articles and Association (essentially the rules governing how a company is run and what it can and cannot do).

It takes two leaseholders to start and RTM company; a minimum of two directors are required. (For help with recruiting members see step 3).

STEP 3

Now that you have formed a RTM company the next step is to serve the Notice Inviting Partcipation, which is mandatory.

The RTM company must serve the notice to every qualifying leaseholder who has not already joined the company.

To do this you will need to know who each flat is registered to. Remember, a flat could be owned by one person in the flat, everyone in the flat, a trust, or a company. An HM land Registry search will tell you everything you need to know. (Note: It is also possible to approach the landlord, his/her appointed managing agent or the landlord's solicitor, however this may alert the landlord to your intentions of seizing control of the block.)

You can post the participation notice or deliver it in person. Every qualifying tenant is entitled to join the company.

STEP 4

Under the Section - 79 of the Commonhold and Leasehold Reform Act 2002, the Claim Notice informing your landlord of your intentions can only be served:
  • at least 14 days after the Notice Inviting Participation
  • once membership of ther RTM company has reached more than 50% of qualifying leaseholders

The notice must be sent to the landlord, any third parties (such as an appointed managing agent) and all qualifying leaseholders in the block. Once again, you can post this notice or, where appropriate, serve it in person.

It must contain the date by which you require the landlord (or other recipients) to respond - allowing no less than 28 days to consider the claim.

If none of the relevant parties disputes the claim, then the the likely acquisition date for the Right to Manage is a further four months after the issue date of the Claim Notice. It may be worth considering, therefore, the timing of your initial Claim Notice to avoid busy periods, bank holidays and so on.

STEP 5

Leaseholders do not need to prove any fault on behalf of the landlord to exercise their Right To Manage.

To dispute the claim the landlord must prove that the application for RTM does not comply with the 2002 Act. In this situation, any errors in the initial application could be exploited to the landlord's benefit.

Having received the Claim Notice the landlord has the following options:

  • No response / no action
  • Issue a counter-notice disputing the claim to RTM
  • Issue a counter notice accepting the claim to RTM

If the landlord wishes to dispute the claim he/she must respond within the period specified in the notice.

If the RTM company receives a counter-notice from the landlord it should examine it carefully and, if possible, adjust the initial Claim Notice. If the Claim Notice cannot be adjusted satisfactorily the claim must be abandoned.

If the RTM company remains convinced of its entitlement then the matter must be resolved by the Leasehold Valuation Tribunal (LVT). The RTM company must apply to the LVT within two months or the claim to RTM will be invalid.

The LVT would delay any possible RTM acquisition date by around three months. (Under some circumstances it may take longer.)

STEP 6

If you have reached this stage you are close to acquiring your Right To Manage.

Before you gain control however, there are still few things you need to do:

  • Collect as much information as possible from the landlord and any third parties (such as a managing agent) about the building
  • Excercise your right of access to the building. You should be able to access all common parts in the block.
  • Consider who is to undertake the management of the block. Managing a residential block is a considerable responsibility and one that should not be undertaken without a realistic consideration of what is involved. Advisory bodies are agreed that leaseholders should be encouraged to appoint a managing agent initially, even if their long-term aim is to manage the block themselves.

The landlord must also fulfil his/her duties:

  • The landlord must inform any contractors currently providing services to the block the the Right To Manage is being exercised.
  • The landlord must inform the RTM company of any existing contracts concerning the block.
  • A full and clear picture of the block's accounts must be provided. Any leftover service charge revenue must be transfered to the RTM company on the acquisition date. Before funds are transferred the landlord will need to settle any outstanding bills with contractors. This process may take some time.

STEP 7

Under usual circumstances and without dispute from any other party, your Right To Manage will be acquired around four months from the service of the Claim Notice. For a more detailed description of the RTM timeline view the RTM Flowchart.

Congratulations!
If you have reached this point you have now taken control of your property and the way it's services are managed.

Company Duties
From the date of acquisition the RTM company is takes over the landlord's responsibilities for the maintenance, repair, collecting service charges and accounting , insurance and overall management of the block.

Existing service charge funds are handed over to the new company while contracts are either transferred or terminated, as appropriate.

After the handover the landlord's position is similar to that of a leaseholder and as such is also a member of the RTM company. Like any other leaseholder in the block he/she may sue the RTM company for bad performance or apply to the LVT.




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