Taking over the Right to Manage Your Block – 13 Key Points You Need to Know
This article was written by Tim Bishop – senior partner of Bonallack and Bishop, Wiltshire solicitors who specialise in lease extension, collective enfranchisement and right to manage company formation for clients nationwide and who run the http://www.enfranchisementsolicitors.co.uk and http://www.leaseextensionuk.co.uk websites.
If you own a long leasehold flat [i.e. one granted with original minimum term of 21 years – but more usually 99 or 125 years], you’re probably aware that you have the right, with your fellow leaseholders, to exercise the right to take over management of the entire block.
The good news is that you don’t have to prove that your freeholder has made a poor job of block management – or that they are in breach of any of their obligations under the lease.
Great for buy to let landlords too
And what’s more, you don’t have to have ever in the flat to participate in the right to manage. So it’s just as useful for buy to let landlords as owner occupiers. So if you’re dissatisfied with the current management arrangements for your block – perhaps the quality of the work is dreadful or you think you’re being overcharged – the answer could be to take over the right to manage your block.
Right to manage – what you need to know
But if you are thinking about exercising the right to manage – here are the 13 key points you need to understand.
1. The Right to Manage the applies to residential blocks – not commercial leases
2. A freeholder can only challenge an application for Right to Manage on a very limited number of points.
3. The owner of every flat who meets the Right to Manage criteria has to be invited to take part. If they want to get involved, then they must become members of the RTM (right to manage) company.
4. A freeholder or managing agent doesn’t have to have done anything wrong for leaseholders to be granted Right to Manage.
5. The freeholder still has to be consulted on some decisions, and has the right to become a member of the RTM company if he or she wishes to do so.
6. Someone who is a long leaseholder of a house cannot be granted Right to Manage.
7. When Right to Manage is obtained, this terminates some of the freeholder’s previous contracts.
8. In most cases, leaseholders who meet the criteria for collective enfranchisement [when leaseholders come together to buy the freehold of their block from the freeholder also meet the criteria for Right to Manage.
9. Four months has to pass from the date the claim notice is sent for the Right to Manage to be obtained.
10. Right to Manage companies have to have a standard constitution to limit them by guarantee, and to set out issues such as rights to vote.
11. Gaining the Right to Manage in a leasehold property doesn’t give the company members the right to extend the lease on their flats, because the freeholder does not give up any of their interest in the property.
12. No premium is paid by participants in a Right to Manage. They therefore have no additional costs of having the property valued or compensating the freeholder for loss of interest.
13. Leaseholders who take on the Right to Manage have to pay back their freeholder’s necessary costs as well as their own costs.