© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
The Right to Manage (RTM) is a powerful tool for leaseholders. It gives leaseholders the right to take over the management of their building including repairs, maintenance, services and the levying of service charges without any requirement to prove default by the Landlord or payment of compensation.
A building is eligible if it contains two or more flats and at least two thirds of the flats are on long leases, but if there is a commercial element this must not exceed 25% of the floor area. The participating tenants must hold at least one half of the flats in the building.
The tenants must form a Company with a memorandum and articles in a form laid down by Parliament in order to exercise RTM. It is the Company which makes the application.
All qualifying tenants in the building are entitled to membership of the RTM Company and so is the Landlord but only on the acquisition date. In order to become members of the Company the leaseholders must make an application to the Company in a form laid down in the articles of association. It is important that the applications are made and the Company passes a resolution accepting the applications and then enters the applicants as members in the Company=s Register of Members before serving the notice.
Notice must be served by the RTM Company on all other tenants who have not applied to join, inviting them to participate and giving them information on the Company=s management proposals. It may be necessary to prove that all lessees are members or have been served with an invitation to participate so care must be taken in preserving evidence that the invitations have been duly served.
The RTM Company may serve Notice on the Landlord requiring him to provide the information the RTM Company reasonably requires in connection with the making of a claim.
The Claim Notice has to be served on the Landlord claiming RTM specifying a date for the Landlord=s Counter-Notice (not earlier than one month ahead, but allow an extra week for service) and an acquisition date for acquisition of the right to manage at least three months after the due date of the Counter-Notice. A copy has to be sent to every qualifying tenant.
After service of the Notice of Claim the RTM Company has a right of access to any part of the premises and so does the Landlord on ten days= notice.
The Landlord must serve a Counter-Notice admitting the claim or denying the claim. Where the claim is denied the RTM Company can apply to the LVT within two months. The grounds for denying the claim are however fairly limited, essentially the Landlord needs to show that the Tenants have failed to satisfy the criteria or comply with the formal requirements of the Act.
The RTM Company will be liable for paying the Landlord's reasonable costs arising from the claim, and the LVT proceedings if the application is dismissed. The reasonableness of the costs can be determined by the LVT.
The RTM Company will take over the management on the acquisition date. Notice seeking information needed to manage the property should be served 28 days before the acquisition date.
After acquisition, voting rights in the RTM Company are one vote per flat. The Landlord has one vote and the Landlord's retained flats (if any) one vote per flat.
The Landlord must hand over all information which the Company reasonably requires him to provide in connection with the exercise of the right to manage within 28 days but not before the acquisition date. He must also hand over uncommitted service charge monies as soon as practicable.
The Landlord must give notice relating to all contracts in force to the other party to the contract and to the RTM Company.
RTM has been remarkably successful legislation. The LVT and the Lands Tribunal, in particular in the Oak Investments RTM Co Ltd v Sinclair Gardens decision ( which can be viewed on the Lands Tribunal website), have been robust in resisting technical challenges to notices where there have been procedural irregularities.
Of course there are exceptions, but in general when, a few years after taking over, I see groups of lessees who have enfranchised or exercised RTM I am invariably impressed how successful they are in managing their building, with or without the assistance of managing agents. The power is there - use it.
by Mick Barry, senior partner of Farrington Webb