Rights to manage – am I eligible?
The Commonhold and Leasehold Reform Act 2002 awards qualifying leaseholders the statutory rights to manage their building without having to buy the freehold. These rights to manage enables a tenant to remove the management control of the building from the landlord and create a “right to manage company” [also known as an RTM company]. In many cases the landlord will have appointed their own independent management company. The rights to manage exercise works in the same way in this situation as it removes the control from the management company as opposed to the landlord.
A desire to exercise a right to manage can arise when a tenant becomes frustrated by the level of care put in to the maintenance of their building or the level of charges they have to pay for maintenance. However it is not a pre-requisite to claiming the right to manage that the landlord must have either acted negligently or that the tenant is not happy with the maintenance charges.
Rights to manage – what are the advantages?
The major benefit of exercising the rights to manage is that tenants gain control over the maintenance and development of their building. Good management is inevitably connected to the value of the individual flats and therefore increasing the value of the flat is now in the tenant’s hands. A flat within a building which is managed by tenants normally attracts a higher sale price as people are attracted to the control.
Tenants can also stop paying any extortionate maintenance fees to their landlord or his/her management company and usually administer the costs more effectively.
As a UK RTM company is limited by guarantee rather than limited by shares, when a participating flat is sold the RTM company is under no obligation to issue shares to the new tenants.
In order to exercise your rights to manage the following criteria must be satisfied:
- You must reside in a self-contained block of flats.
- The landlord must not be charitable housing and the lease must not be a business lease.
- The building must be at least 75% residential use.
- You must ‘qualify’ for the right, i.e. you must be the owner of a long lease (more than 21 years).
- 2/3 of the building must be let to other ‘qualifying’ tenants.
- 50% of the qualifying tenants in the building must want to exercise the right to manage and must become members of the right to manage company.
For advice from exercising your rights to manage, talk to us first
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