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Understanding the Right to Manage process and how it can benefit you

Posted on April 13 2021

There is a difference between having the Right to Manage as a leaseholder, and having the knowhow to do so effectively. Forming a Right to Manage company (RTM) comes with tangible benefits and some very real responsibilities.

The Commonhold and Leasehold Reform Act 2002 provides a right for leaseholders to change the appointment of the management of their building to another provider. This involves the establishment of a unique, commercial vehicle to assume responsibilities from the freeholder (where they are the landlord) and oversee the functions of their building moving forward. This commercial vehicle is known as a Right to Manage Company.

Establishing an RTM can help leaseholders exercise control over the insurance, repairs, service charges and general maintenance of their premises. There are unique eligibility requirements, such as the number of leaseholders and the duration of their current leases, that determine whether you can successfully apply to form an RTM company and assume management responsibilities of your building.

If there is the required number of leaseholders interested in joining an RTM and all other eligibility requirements are met, then a limited company can be formed, and the relevant legal notice served on the landlord advising of intent to exercise the right to manage the building. The leaseholder’s RTM claim notice is served on the landlord setting out the timeframe for RTM handover. If the landlord fails to respond, or alternatively accepts the claim, then the RTM acquires management functions within 3 months. Where a landlord disputes the claim, the RTM must apply to the First Tier Tribunal within 2 months of the date of the Landlord’s counter notice for a determination on whether the application should succeed.

Once formed – the RTM can review items such as service charges to leaseholders within the building, however it also then assumes the burden of block management responsibilities, including all compliance and maintenance obligations. Omnia can assist leaseholders with understanding how to efficiently oversee these ongoing requirements as well as how to optimise the benefits of forming an RTM while minimising the administrative distraction. There is a cost-benefit analysis to RTM creation and management that is as unique to leaseholders as it is to buildings themselves.

Omnia Estates, part of the Omnia Property Group, has substantial experience in advising leaseholders on the prospective benefits of forming an RTM and can assist in both its formation and ongoing management of its obligations.

If you are uncertain about if you can form a RTM, whether you should, or what you need to do with it once you’ve got one – reach out to one of Omnia’s highly qualified property managers on 0114 2792840 or for a confidential and no-obligation discussion.

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