Mark Chick: What Is Right To Manage?

Leasehold Life is very pleased to publish a succinct overview of the right from leasehold reform specialist Mark Chick, a member of Bishop and Sewell LLP and author of the websites Leaseholdinfo.com and Leasehold Reform News.

The Right to Manage is a no-fault right to take over the management of your building.
It is similar in qualification terms to the right to buy the freehold under the Leasehold Reform Housing and Urban Developement Act 1993. In other words at least half of the flat owners must act collectively to exercise the right.

The flat owners need to incorporate a company (called a ‘RTM’ ‘Right to Manage’ company). This is a company limited by guarantee.

Prior to taking active steps to take over the management the company must first serve a notice of invitation on all flat owners who are not members of the company asking them if they wish
to join the company and confirming how they may do so.

Notice To The Landlord

Once this has been done the company can then (at least 14 days later), serve a notice on the landlord claiming the right to manage. To be valid at least half of the total number of long leasehold flat owners in the building must be members of the RTM company when the notice is served.

The notice specifies a date (normally one month away) by which the landlord must respond confirming whether the right to manage is admitted. If not, the landlord can serve counter notice but can only effectively object if the building itself does not qualify, or there are issues relating to the way in which the participation has been organised.

In the case of an objection the flat owners can apply to the LVT for a determination of whether they were entitled to exercise the right to manage.

When the notice claiming the right to manage is served, a further date (normally 3 months after the date of the notice claiming the right) is stipulated. This is the date on which the management obligations will transfer to the RTM company.

In the intervening time, if the right is not disputed, the landlord must give notice of the intending change of management to any suppliers with ongoing contracts and offer them the opportunity of renewing these with the incoming manager.

In the RTM notice, the flat owners must specify the name and details of their new manager. This can either be their own RTM company, or much more likely a firm of managing agents.

Landlord Admits Claim

Assuming that the notices are validly served, the landlord will have little option but to admit the claim and on the relevant date as stated in the notice claiming the right all of the landlord’s management functions under the leases transfer to the RTM Company. This includes the grant of approvals and consents under the leases and also the choice of contractor for repairs as well as giving the RTM company the opportunity to select the building’s insurers (provided that the landlord is allowed to do this under the terms of the leases).

The landlord has the right to be advised about and to investigate the flat owners’ claim and can recover the reasonable legal costs of doing so from those who have taken part in serving the notice.

Dispute Over Validity

If a dispute arises as to the validity of the flat owners’ notice and this goes to the LVT, if the claim is dismissed, the flat owners will have to pay the landlord’s costs. However, if a claim is invalid, or withdrawn, there is no restriction on the flat owners serving a further notice straight away.