RIGHT TO MANAGE - Rules
With the introduction of the Leasehold and Commonhold Act 2002 the leaseholders or lessees could take on the management of the block-a task previously undertaken by the freeholder or lessor. All that was necessary was to incorporate a Right To Manage Company (RTM). However the members of the proposed RTM should recognise that they will have additional responsibilities and commitments and not all will be eligible to become members of the RTM.
To qualify as a member of a RTM the following criteria must be met. If you cannot satisfy the criteria then regrettably you can’t become a member of the RTM.
- The building must be self-contained, or if part of another building, be capable of being redeveloped independently
- Right To Manage is only available to leaseholders of flats and NOT houses
- The leasehold property must contain more than 2 flats
More than 2/3 of the leaseholders must be “qualifying tenants”. A qualifying tenant is a leaseholder whose lease was originally granted for an original term of more than 21 years. There is no requirement for any past or present residence in the flats, or any limit on the number of flats that can be owned by one person.
The Right to Manage can only be exercised by a Right To Manage company and the members of the RTM company must comprise a sufficient number of qualifying tenants. The required minimum number of qualifying tenants must be equal to at least half the total number of flats in the building.
(So in a block of 12 flats using the 2/3 rule then at least 8 flats must have an original term or more than 21 years and using the 50% rule the RTM must consist of at least 6 flats. Both conditions must be met)
- It can be part commercial but the non-residential part must not exceed 25% of the total floor area.
- The Right to Manage can only be exercised by a Right To Manage company and the members of the RTM company must comprise a sufficient number of qualifying tenants. The required minimum number of qualifying tenants must be equal to at least half the total number of flats in the building
- There must be no social housing
- Any flat occupied by the landlord or his family doesn’t count
If you can answer yes to the points above then you are able to incorporate a RTM company.
The Right relates to a building and where there are several separate blocks in a development, each block would need to qualify separately and an individual RTM notice served on each block. Where there are several blocks of flats on the same development under the same management, it would be prudent to take over the management of the whole estate, but this could only be achieved if an application was made in respect of each separate block.