What is the Right to Manage (RTM)?
It is a right that empowers leaseholders to take over the management of their building. It is only applicable to leasehold flats. Leaseholders can exercise the Commonhold and Leasehold Reform Act 2002. Taking over management by setting up a special company – an RTM company. There doesn’t have to be a question of bad management by either the landlord or the property manager. The Company assumes full management responsibility for the building, including communal areas and wider responsibilities such as the structure of the building. Its members are free to appoint a property manager of their own. You can therefore get rid of any management companies who don’t wish to manage your property.
For a more detailed breakdown of eligibility, see our guide on
👉 https://www.iinsure365.co.uk/blog/right-to-manage-qualification
Why do it?
The main reason for it is to put the power and control back in the leaseholder’s hands. It enables qualifying leaseholders to set the standards of their block, including how communal areas are maintained. To have control over their costs such as maintenance fees and service charges, especially in larger developments with multiple flats in the building.
You can also ensure that your management companies that you have dealt with in the past will no longer manage the property. When you have an acquisition date then you will be able to ensure that you take this over. You may want to either even consider buying the freehold as well as taking control of the management. This may be particularly relevant depending on the structure of the building and how responsibilities are currently divided.
If you are considering alternatives, you may also want to read:
👉 https://www.iinsure365.co.uk/blog/buying-the-freehold-vs-rtm
Who qualifies to be part of the RTM?
We have another article that provides a more in-depth explanation here – on how to qualify. In short, a leaseholder that was originally granted a lease of more than 21 years is a qualifying tenant. There is no limit on the number of flats in the building owned by one person.
The right relates to a detached building, so in the case of an estate where the blocks are structurally detached. Each block would need to qualify separately and an individual notice served. This is especially important where the structure of the building differs between blocks.
We have another article that provides a more in-depth explanation here:
👉 https://www.iinsure365.co.uk/blog/right-to-manage-qualification
Do iInsure365 pay commission to any managing agents?
iInsure365 does not pay any commission to managing agents for any part of our insurance. We do receive a commission in relation to the insurance we provide which we are happy to disclose. iInsure365 are a completely open and transparent business. We will work hard to ensure that your annual premiums remain competitive on a year to year basis, including cover for communal areas and the structure of the building, without compromising on the standard of cover.
What is the least amount of Directors and do they have to be residents?
The company is only required to have at least one Director. But, normally there is between three and five depending on the size of the premises/block and number of flats in the building. There is no need for Directors to be residents.
Can the leaseholders exercise the RTM if the landlord lives in the building?
It cannot apply where the premises fall within the resident landlord exemption.
The criteria for this exemption are as follows:
- a) The premises are not a block of flats
- b) There are less than four flats in the building
- c) The landlord or an adult member of their family has occupied one of the flats as their only or principal home for the last 12 months.
What sort of majority do we need to go ahead?
You must have at least a 50% majority to proceed. As long as at least half of the leaseholders in the block of flats are in support, the RTM can proceed. This ensures fair control over shared responsibilities such as communal areas.
What are the responsibilities of the company Directors?
All Directors have the responsibility to serve the best interests of the company. This includes managing the property in the best interests of all leaseholders, including upkeep of communal areas and maintaining the structure of the building.
Will we be able to choose our own managing agent once we have taken over the management?
Yes, RTM Companies can find and instruct their own managing agents. It is important that you take the time to choose your own managing agent, especially if your building has complex needs relating to the structure of the building.
Can we expect to save money?
Yes, you very likely will. Many leaseholders are facing excessive charges for compulsory items. Things like buildings insurance, alarm monitoring, and maintenance contracts. These costs often relate to shared services across flats in the building.
Who owns the freehold after the leaseholders take over the management?
The landlord/freeholder would not change. The freeholder retains obligations under the lease. However, responsibilities such as maintenance of communal areas and the structure of the building transfer to the RTM company.
Is the RTM Company bound to carry on with existing contracts?
The takeover of the management process will bring an end to all the existing contracts. The members of the RTM can then choose whether to continue with the contracts or not, including those relating to cleaning communal areas.
Get a Quote
If you are taking control of your building and want competitive insurance tailored to RTM companies, you can get a quote here:
👉 https://www.iinsure365.co.uk/get-a-quote
The pros and cons of right to manage
The advantages
No rip off service charges
You will control what you spend across all flats in the building, ensuring fair allocation.
Fast repairs
You should be able to get maintenance and repairs completed more quickly, particularly where the structure of the building requires urgent attention.
Quality maintenance
You can control who you employ to work on your building, including contractors responsible for communal areas.
The disadvantages
Running a company
You will need to manage finances relating to all flats in the building.
You are responsible for the building
It will be down to you to ensure that you can maintain your building, including both communal areas and the structure of the building.
