In this article, Leasehold Property Expert Niki Adkins gives you an update on when we might see the leasehold reform act come into force.
Subject to certain criteria, a group of leaseholders have a right to force the transfer of the management functions in their lease to a special company set up by them - the Right to Manage company.
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The right was introduced to allow leaseholders to:
- Take control of bad management
- Take responsibility for the management of their block
Only 50% of the lessees in the block need to participate in the Right to Manage scheme.
We have a team of experienced professionals with expertise in enfranchisements, lease extensions and acquiring the Right to Manage and associated issues. We would be happy to help with questions on your specific property.
Free initial appointment
We offer all new clients a free initial chat with one of our bright lease extension experts. This can be over the phone, through video call or in person at our Christchurch or Ringwood offices.
Although the team are based in Ringwood, we deal with matters from all over the UK, such is our reputation.
Where a face-to-face meeting is necessary, we have put the required safety measures in place.
Call us on 01202 499255 or fill in your details, and one of our friendly team will be in touch to arrange your free meeting.
What the Right to Manage does
If you exercise your Right to Manage along with other leaseholders, you will take on a number of rights and responsibilities. Benefits include the following:
- Control of expenses. You can look around for the best deals and ensure that services charges are fair
- Keeping on top of maintenance and repairs and ensure they are done as soon as problems arise
- Democracy amongst the flat owners in respect of decisions, as each leaseholder receives a vote
At Frettens, we act for clients who want to exercise their Right to Manage, helping them with the following issues:
- Setting up an RTM company and legally transferring the rights and obligations from the landlord to the leaseholders.
- Making sure the proper process is followed and that the Right to Manage company is set up with a sound legal foundation.
- Advising as to ongoing management so that leaseholders can ensure their flats have a robust management system in place that will withstand any difficulties that might arise in the future.
Having a sound and well-run management company in place not only gives leaseholders certainty and peace of mind, it can also help should you decide to sell your flat.
Poor management and lack of proper repairs and maintenance can potentially make a property difficult to sell and buyers may pull out if they find problems with the flat management process.
For more information, see How to take control of management of your block of flats.
We have a team of experienced professionals with expertise in enfranchisements, lease extensions and acquiring the Right to Manage and associated issues. We would be happy to help with questions on your specific property.
Download our factsheets on lease extension & enfranchisement
Download our director's guide on freehold management
Our expertise with the Right to Manage leasehold property
Eligibility for Right to Manage
To be eligible to set up a Right to Manage company you need to meet a number of qualifying requirements, as follows:
- The building must be self-contained with a minimum of two flats
- No more than a quarter of the building can be used commercially, excluding common parts
- At least two-thirds of the flats must be owned by qualifying tenants, i.e. leaseholders with leases that were originally granted for a term of more than 21 years
- At least half of the leaseholders must wish to take part or all leaseholders where there are only two flats in the building
There is an exemption if the landlord themselves or one of their adult relatives lives in the property, provided the property is not a purpose-built block and provided there are no more than four flats in the property.
This generally applies to a converted house where the landlord lives.
Setting up a Right to Manage company
If you wish to take up your Right to Manage, you will need to set up a Right to Manage company. This will involve you and the other leaseholders taking on the roles of director and secretary.
Our team can help with the entire process of setting up a Right to Manage company, ensuring all of the necessary legal steps are taken care of and that your new RTM company is established on a solid foundation.
The Right to Manage process
Right to Manage company formation requires the appointment of at least one director, generally someone living at the property. The landlord is also entitled to be a member of the company and as such will receive a single vote.
Once the company has been set up, a formal notice should be served on the landlord advising them that the leaseholders intend to exercise their statutory Right to Manage.
If the landlord has no grounds to object, then after a month the Right to Manage is deemed to be valid. A further three months after this the RTM company will be able to take over the flat management.
Advice for Right to Manage company directors
Taking on the management of a leasehold property does involve a certain amount of work in keeping records up to date, dealing with buildings insurance and repairs and ensuring everyone pays their service charges on time.
It can be a challenging job and it is advisable to deal with things promptly as they arise to set a strong precedent and keep matters amicable between all of the leaseholders. It is open to the Right to Manage company to appoint a managing agent to deal with this on their behalf.
We are happy to provide one-off or ongoing advice to RTM company directors, so they can be sure they are meeting their obligations and any problems can be promptly resolved.
Right to Manage dispute resolution
There are a number of areas where disputes could arise.
Common issues include non-payment of service charges, breach of the covenants contained in leases and disagreements as to where money should be spent, for example, whether a new roof takes priority over other maintenance works if there are not sufficient funds to carry out all of the desired works.
The documents setting out the relevant legal rights are the leases, the company’s articles of association and relevant statutes, including the Companies Act.
It is always preferable to deal with disputes without recourse to the courts. A leasehold property expert will be able to suggest how to resolve issues and can negotiate with those involved to try and reach an amicable solution.
Disputes should be dealt with as soon as they arise to prevent positions from becoming entrenched.
Ending the Right to Manage
Right to Manage can be terminated by the making of an application for the appointment of a manager, which is a decision that should be made jointly with the landlord. The landlord would need to agree to take back the responsibilities of management.
In some cases, the Right to Manage company could lose the Right to Manage the building. As well as losing the right through poor management, if the company was to go into receivership, the responsibility for management would revert to the landlord.
If the Right to Manage company decides to buy the freehold of the building, known as enfranchisement, then it would stop having management rights.
Get in touch with our Right to Manage solicitors in Dorset
At Frettens, our expert property solicitors have wide experience in dealing with all aspects of flat ownership and management. If you are considering enforcing your Right to Manage and you would like to discuss the process, please feel free to contact us.
You can ring us on 01202 499255, or use our Get In Touch form here. We are happy to have a free initial chat with you to talk through your options.
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