When it’s time to take over

publication date: Jun 3, 2008

What happens when you’ve tried talking things over with the freeholder and his managing agents and the building is still being run to an unacceptable standard? Columnist Sharon Crossland solved this problem by going the Right-to-Manage route with the London block where she was a leaseholder.

Right to Manage, or RTM, basically means that the freeholders in a building take over the management of the block from the freeholder – although it’s not quite as simple as that. In our case, the decision and agreement to take the RTM route was based on years of neglect by the freeholder and his agents.

We began the procedure by securing a managing agent who took us through the process. This isn’t strictly necessary, but was a great help. Our agent was found through networking with leaseholders in other blocks, but this can just as easily be done by consulting the Little Red Book’s listings, going through ARMA or by putting the block out to tender.

RTM can only be exercised in blocks where;

* The building is self-contained, or part of a building which is self-contained;
* The building includes a minimum of two flats;
* The leaseholders in at least two-thirds of the flats hold leases which, when granted, are for a term in excess of 21    years;
* If a part of the building is classed as non-residential, this is not more than 25 per cent of the premises’ floor area.

After establishing that we met these criteria, our agent put the procedure in motion. A meeting was convened of the qualifying leaseholders, where two attendees volunteered to be the Company Directors of the required RTM company vehicle. This must be set up ahead of making a claim for the rights, as RTM cannot be claimed by individual leaseholders. This vehicle must also have 50 per cent or more of the qualifying tenants within the building as members to be able to proceed with claiming the right to manage, although it can be set up by any number of tenants.
Once the RTM company vehicle was set up and agreed upon, it was registered at Companies House. An S78 Notice of Participation was served on the remainder of qualifying leaseholders who had not become members, inviting them to join, as the law requires that all qualifying leaseholders in the block must be given this invitation.

We were then able to proceed with serving the notice of claim on the landlord. Fortunately, in our case there was no objection. In cases where the freeholder does object, the dispute must go to the Leasehold Valuation Tribunal. For us, the whole process took around nine months from start to finish, although if there is an objection on the part of the landlord, this can make the process longer.

Once RTM has been secured, the extent of the instructions issued to the agent will largely be dependent on the state of the development. We needed to have a full survey done of the premises, instruct temporary repairs to prevent further damage and decide the order of priority of essential works. Subsequent to this, our day-to-day management has essentially meant knowing our development and reporting any new problems as soon as they arise.

As a result of combining knowledge with a competent, professional agent, we are now starting to reverse two decades of the development’s decline, creating a more attractive and secure environment for those of us that live here, and ultimately improving the investments of all the flats’ leaseholders.