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Right to Manage – Frequently Asked Questions

What is the Right to Manage?

 

The Common and Leasehold Reform Act 2002 introduced a right that enables leaseholders to take over the management of their building. This is by setting up a Right to Manage Company. There doesn’t have to be a question of fault by either the landlord or the property manager. The Right to Manage Company assumes full management responsibility for the building. Its members are free to appoint a property manager of their own.

 

What is the purpose of the right to manage?

 

The main reason for having a right to manage is to put the power and control back in the leaseholder’s hands. It enables them to set the standards of their block, managing it themselves. Also, they can ensure that they are getting value for money with their outgoings.

 

Do iInsure365 pay commission to any managing agents?

 

iInsure365 do not pay any commission to any 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 whilst maintaining the standard of cover.

 

What is the minimum amount of Directors and do they have to be residents?

 

A right to manage company is only required to have one Director. However, normally there is between three and five depending on the size of the premises/block. There is no requirement for Directors to be residents. The majority of most Directors are normally residents. This is to avoid disproportionate influence from people who are not experienced in the property day to day living. The landlord of the building has no legal right to be a Director.

 

Can the leaseholders exercise the Right to manage if the landlord lives in the building?

 

Right to Manage cannot apply where the premises fall within 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

c) One of the flats has been occupied by the landlord or an adult member of their family as their only or principal home for the last 12 months.

 

Can a leaseholder ask the landlord to provide the names of the other leaseholders to invite them to participate in the Right to Manage process?

 

It is only the Right to Manage Company that can insist on the landlord providing the names of the leaseholders for this purpose. In the first instance, it would be necessary to speak to the flat owners or check the Land Registry. It may be best to use a solicitor to ensure that it is done correctly. 

 

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 right to manage can proceed. 

 

What are the responsibilities of the Right to Manage Directors?

 

All Directors have the responsibility to serve the best interest of the members of the Right to Manage Company. This goes as far as managing the property in the best interests of all leaseholders of the estate. Right to Manage companies can appoint a managing agent to deal with the day to day management of the estate itself. However, we can provide you with Directors insurance to cover any liability.

 

Will we be able to choose our own managing agent under our Right to Manage?

 

Yes, all reputable Right to Manage Companies should undertake to operate a code of practice. The Association of Residential Managing Agents (ARMA) adopted a code of practice with the Royal Institute of Chartered Surveyors (RICS). It is therefore important that you take time to choose your own managing agent.

 

Can we expect to save money?

 

Yes, most probably. Many leaseholders are facing excessively high charges for items such as buildings insurance, alarm monitoring and maintenance contracts. We would be more than happy to supply you with a like for like quote. We believe it would be substantially less than what you are currently paying not only in the first year but every year thereafter. Don’t hesitate to ask us for a like for like quote.

 

Who owns the freehold after the Right to Manage?

 

The freeholder would not change. The freeholder retains his obligations and responsibility previously held under the Lease. This is apart from the management responsibilities of the building. These transfer to the Right to Manage. The collection of ground rent would still be required under the right to manage.

 

Is the Right to Manage Company bound to carry on with the existing contracts entered into by the landlord?

 

The Right to Manage process may well frustrate the existing contractors. The takeover of the management responsibility by the Right to Manage Company will bring an automatic end to all the existing contracts. The Right to Manage Company can then choose whether to continue with the contracts or not. For instance such as cleaning and insurance.

 

The Right to Manage is in force, but the landlord insists that they continue to insure the building, is this correct?

 

No. The Right to Manage Company has taken over the management function from the landlord (and any management company that might be in place). The management functions include the insurance of the building. We would be more than happy to give you a quote in this regard.

 

To exercise the Right to Manage, how is the process started?

 

A Right to Manage Company will need to be formed. Click here to read more on the Right to Manage Company Formation process.

 

What can leaseholders do if the landlord fails to provide any information requested?

 

The landlord may decline to give over required information in response to a request under Section 82 or 93 under the Common Leasehold and Reform Act 2002. Leaseholders are then entitled to serve a default notice which will give the landlord 13 days to comply. If he fails to do so they can then bring an application for compliance in the local County Court under Section 107. This may not seem to be a practical solution but the court can make a cost order against the freeholder as well as granting the order requested. It is advised to use the services of a solicitor to do so.

 

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