Is ‘right to manage’ worth it?

Acquiring the Right to Manage is seen as very worthwhile for many people. However, its value will depend on your unique circumstances, so we have outlined the associated benefits and disadvantages to help you decide whether acquiring the Right to Manage is the right approach for you to pursue.

What is The Right to Manage?

The Right to Manage (RTM) legislation was introduced in 2002, giving leaseholders more control if they are dissatisfied with the way their landlord or the Freeholder is managing the services of their building. RTM lets some leasehold property owners take over management of the building – even without the agreement of the landlord.

This means that the leaseholders form a company which will be responsible for things like:

  • Collecting and managing the service charge
  • Upkeep of communal areas.
  • Upkeep of the structure of the building.
  • Dealing with complaints about the building from other leaseholders.

Qualifying leaseholders can use the Right to Manage for any reason – they do not have to prove the building has been poorly managed.

Right to Manage companies

If you are a leaseholder who wants to use this approach, you must set up an RTM company and follow certain procedures. The RTM company can manage the building directly or instruct a managing agent to do it. Your landlord will have the right to be a member of the RTM company and vote on decisions, but the number of votes they are entitled to will depend on how many flats the landlord owns in the building.

So, are RTMs worth it? Well, it will depend on your experience. For a group of lessees willing to act together and with the right skill set, RTM can be a worthwhile way of ensuring quality management of shared areas and services and expenditure on services that are important to them. However, some may find the process challenging as the practical implications of having to collectively manage the estate become apparent. Decisions will need to be reached by consensus and conflicts of opinion can make it difficult for an RTM company to act effectively. Disputes are common.

The benefits of Right to Manage

  • Leaseholders gain greater control over the costs of running the building.
  • By forming an RTM company, you can choose and change contractors whenever it suits company members. If you are not happy with their services, you can simply find and switch to another company.
  • Decisions on works can be made and conducted at the lessee’s pace. Where a property management company is likely to have lots of different estates to manage, RTM company members only have the one building to focus on.

The disadvantages of Right to Manage

  • It is a time-consuming process. You will also need to appoint a board of Directors who will set the budget, organise all the works, pays contractors, and inspect their efforts.
  • The board members will need to be able to cope with the associated stress of running the building. Deciding on how to invest funds and direct ongoing works is a lot of responsibility and can be a challenging task, particularly if the other leaseholders disagree or argue over the decisions made.
  • There is significant legislation that needs to be complied with regarding collection of Service charges, planning major projects and ensuring the building is addressing health, safety and fire risks.
  • The Freeholder will still own the building and leaseholders will still be bound by the terms of their lease

A RTM company can choose to hire a managing agent to take care of the work involved in running the building. The RTM company members will be able to negotiate service levels with the managing agent and still make all the major decisions, the managing agent simply carries them out.

How can a leaseholder get the Right to Manage?

You can claim the right to manage your building by setting up an RTM company with the other leaseholders on your estate. The main requirements you will need are:

  • At least two thirds of the flats in the building are leasehold
  • At least 50% of the leaseholders in the building agree to form the RTM company

This guide sets out exactly how the process works and what you need to do to qualify.

Before exercising your right, we recommend lessees research and understand the practicalities and risks associated with this approach. We hope that the advantages and disadvantages we have outlined in this article have given you an idea of whether pursuing the Right to Manage is worth it for you and the other leaseholders involved.