Flat Living WEBSITEGUIDE


What are the advantages of right to Manage? sterling estates looksat theprosandconsofRTM


TheinTroducTionof theRight ToManage (RTM)under the Commonhold and Leasehold ReformAct 2002 (the Act) gives leaseholders power in improving themanagement standards of theirblock. Found in Chapter 1ofPartIIofthe Act, theRTM process, viathe formation of an RTMCompany,allows leaseholders to actcollectivelyin themanagementoftheir block, fromselectingcontractors and serviceproviders,tosetting budgetsand servicelevels, even to selectingamanagingagent to undertakeall suchmanagement matters on their behalf.


Whatarethe


advantages? In exercising such aright,the RTMCompany does nothave to showfaultonthe part of the existing Landlord ormanaging agenttosucceed.Therefore whetherthe leaseholders simply wish to takematters into theirownhandsorthe property has been historically mis-managed, theRTMprocess allowsleaseholders to acquirethe management of theirproperty withouthavingtoworry about provingwhy. Successful completion of the


RTMprocessalsoempowers leaseholders with theability to fully controlthe running of the property in question, even as to howandwherefunds arespent. Providingthe covenantsofthe various leases areadhered to and maintained, theRTMCompany candecidewhatmanagement strategytoemployand inmost cases day-to-day efficiency and costscan beimproved,asthe leaseholders will haveavested interest in thesmoothand proper running of the property.


36 ThemajorityofRTM


Companieswillcallonthe services ofaprofessional managing agenttoundertake management on theirbehalf, as therunning ofaproperty canbequite complexinterms of ensuring compliance with various legislationrequirements. In such cases,the RTMCompany is fully at libertytochooseand agreethe servicelevelswiththe chosenmanaging agent, allowing leaseholders to have thefinalsay overwhomanages theirproperty


RTMCompany has an obligation thereforetoboththe Landlord andleaseholders tomanage the property in accordancewith the leases. In effect, a delegation of both responsibility and liability has takenplace. TheRTMCompanyalsotakes


on obligationstoserve the appropriate notice on theLandlord should they receive requests from leaseholders,for examplewith respecttoSubletting, Assignments andStructuralAlterations as prescribedwithin thevarious


..theRTMprocess allows leaseholders to acquirethe management of their property


andhowsuchmanagement is undertaken,ratherthanbeing at themercy ofwhomsoever the Landlord chooses to appoint.


Is there


anythIngelse? Even thoughRTMplaces management powerinthe hands of leaseholders,nevertheless thereare stillanumberof matterswhichwill requirethe seriousconsideration of those personscontemplatingsuch aprocess.With powercomes responsibility,andasuccessful RTMprocessineffectputs the RTMCompany in theplace of theLandlord forthemajority of mattersascontainedwith the property leases. For example it becomes theresponsibility of theRTMCompanytocarry out repairs,maintenance and insurance of theproperty,aswell as ensuringthat servicecharge demandsare issued, collected andmoniesheldasrequired.The


leases.Inmost situations however, anRTMCompanywill appointa selectedmanagingagenttoensure allsuchresponsibilities and obligationsareundertaken,and that theRTMCompanyisfully compliantwithbothlegislation andalsothe obligationscontained within the leases.


sohoWdoesIt


actuallyWork? Therearequalifyingrules laid forth intheActwhichprovidecriteria thatmustbemet,byboththe property inquestionandalsothose residingwithin.Thequalifying rulesare foundwithinSections72 –77ofChapter 1,howeverinshort


themain items are: nThe propertymust be a self- containedbuilding,orpartofa building,eitherwithorwithout


surrounding estate areas. nAt least 50%of the leaseholders within the propertymust sign upfor the processandbecome members of theRTMCompany.


nAt leasttwo thirds of the leaseholderswithin theproperty musthave longleases (a longlease being defined ashavinga term greater than21 years at the time


of issue). nNomore than25%of the propertymaybe used fornon- residentialuse (excludingcar parks/garagesandcommonareas associatedwith the flats). Ingeneral,meetingtheabove


requirementsmeansthereisa goodprobabilitythattheRTM processwouldsucceedforthe property, althoughitwouldbe wise to seektheadviceandinput ofaprofessionalparty first,such asanexperiencedmanaging agent,withrespecttothespecific circumstancessurroundingyour propertyandtheobligationsthe RTMCompanywouldinherit. Aswithmanythings in life,the


RTMprocesshasthepotential tobe either relatively straightforward, or somewhat complex.This can dependonanumber of factors, includingtheresearchcarriedout beforetheprocessiscommenced, theaccuracywhenundertaking theprocedure,andeventheactions oftheLandlordduringandafter, the latterpartyoftenwantingto frustratematters.AsuccessfulRTM process starts offwithasmuch knowledgeaboutthepropertyand itsresidents aspossible.Thiscanbe gainedeither fromwhat is already knownbytheexistingresidents or fromGovernment organisations suchastheLandRegistry.●


PhilipSherreard AIRPM HeadofProperty&Systems SterlingEstatesManagement Ltd Tel 02084273363 email info@sterlingestates.org.uk www.sterlingestates.org.uk


Toreadthis article in full,go towww.flat-living.co.uk/ advice/797-what-are- the-advantages-of-right- to-manage-rtm


Issue 15 Flat Living


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