The Commonhold and Leasehold Reform Act of 2002 gave long leaseholders of residential apartments the right to manage their own block development, subject to certain qualifying criteria.
This means that flat owners can now choose their own management company, negotiate fees and maintenance schedules, determine their own service charges and, most importantly, decide on how best to spend it.
Achieving Right to Manage – or RTM – is far from simple and there are a number of obstacles that could easily cause problems along the way. This could result in wasted time and expense, and which is why we always recommend first speaking to an authoritative management company like ourselves
From the practical experience we have gained over the last five years we have compiled our Ten Top Tips for successful Right to Manage:
1.Check the development qualifies. At least two-thirds of the flats in the block must be let on long leases (21 years or more) and no more than 25% of the floor area of the block used for non-residential use (excluding car parks and common areas for the flats). If a development does not meet these criteria then there is no point in exploring RTM any further.
2. Ensure that there is a majority support. At least 50% of the leaseholders must agree in order to make a valid RTM claim. Early on, try and establish whether this level of support exists or is likely to exist following a bit of persuasion. The first step in claiming RTM is to form an RTM Company and this will cost money that it is not worth spending if RTM will not succeed through a lack of support.
3. Appoint a project team. The success of any RTM will depend on the dedication and time of a small group of leaseholders. Whilst Cable Rock can take care of the mechanics of achieving RTM, there needs to be a management team in place that will later become directors of the newly formed RTM company.
5. Identify the benefits RTM will bring. We encourage leaseholders to write down what they are hoping RTM will achieve, and the problems they hope it to solve, in order that we can provide solid impartial advice. RTM will, in most cases, lead to reduced management fees but it’s worth remembering that it will not enable them to change the terms of the lease, resolve neighbourly disputes, nor stop anti-social behaviour.
6. Make sure RTM is only pursued at the instigation of the leaseholders. We will only act on your behalf if there is majority consent to pursue RTM. There have been cases where predatory Managing Agents have targeted specific developments and instigated RTM without any request to do so by the leaseholders. This only serves the interests of the management company and, consequently, leaseholders may find themselves in an even worse predicament than before RTM.
7. Go through a proper selection process for the new management company. We think we’re the best that there is, but you’d expect us to say that! Once RTM has been decided upon leaseholders should make sure they undertake a thorough selection process for their new managing agent. They should speak to leaseholders of other developments, ask for recommendations and take references; a good managing agent with nothing to hide should always be happy to provide these.
8. Avoid surprises and think about the money. If appointed, we will work with your previous management company to ensure as smooth a handover as possible without disruption of service. We will manage the transfer of any uncommitted service charges to your new bank account, checking that this is in accordance with the management accounts. On the acquisition date, we will also put in place buildings insurance together with a maintenance plan for your building, agreed with the RTM directors in advance.
9. Manage leaseholders’ expectations. We will help you make sure that leaseholders know what to expect from RTM, explain what problems RTM will solve and which it will not, together with the role that the RTM Company directors will play. Once it has been established how much money is in the pot we need to be honest with leaseholders about what jobs will be undertaken straight away and which will have to wait until funds have been built up.
10. Communicate! Perhaps our most important Top Tip we leave to last. Our main role is to ensure a flow of communication with individual leaseholders, the RTM directors and the outgoing management company. If everyone knows what is going on the whole process will flow considerably more smoothly.
In summary, RTM does require some effort and expense but by following our Ten Top Tips and seeking Cable Rocks’ expert, professional advice the right outcome can be achieved.
A director of an RTM Company that recently instructed Cable Rock commented: “Bills are already smaller and, as time goes on, we anticipate seeing even further savings. More importantly, Cable Rock thankfully is now delivering us value for money and we couldn’t be happier with the service they are providing”.