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Right to Manage (RTM) Explained

Property leaseholders have the statutory right to take over the management of a building by setting up a Right to Manage company in the United Kingdom.

Landlords can use this guide to check whether leaseholders have the right, how the process works, and how to dispute a claim (e.g. by serving a counter-notice).

How Does Right to Manage (RTM) Work?

Leaseholders must send notice to the landlord before they can take over the management. Even so, the landlord would still own the building.

Managing a property means leaseholders would be responsible for:

Important: There is no legal requirement for qualifying leaseholders to prove bad management of the building to use the Right to Manage. Furthermore, they can do so without getting agreement from the landlord.

Setting Up a Right to Manage Company

First of all, the leaseholders would need to set up a Right to Manage company and then follow certain rules and procedures.

Once you have set up the RTM company, you can choose to manage the building 'directly' through the company, or you can hire a managing agent to act on your behalf.

As part of landlord rental laws, the landlord would have the right to be a member of the RTM company. As a rule, it means they would also be able to cast their vote on any important decisions.

The landlord would get one (1) vote - as a minimum. However, they could be entitled to more votes (determined by the number of flats that they own in the building).

Example about Voting Rights:

Let's say there is a large block of flats with twenty (20) individual units. The leaseholders own sixteen (16) flats and you own four (4) which you are renting out on assured shorthold tenancies.

In this example, the landlord would get four (4) votes in the RTM company (e.g. one vote for each flat they own and rent out).

Note: Right to Manage companies need to pay for any costs incurred during the management transfer process. This rule applies even in cases where they do not actually manage the building.

Right to Manage Qualification Criteria

Only a RTM company gets the Right to Manage in the United Kingdom. Hence, it must meet certain requirements to qualify, such as:

'Right to Information' Notices

In most cases, leaseholders will contact the landlord after setting up an RTM company. The company may also send a 'right to information' notice to the landlord.

In short, a 'right to information' notice asks a landlord to provide certain information that an RTM company needs to make a claim for their Right to Manage.

Receiving a 'Notice of Claim'

A 'notice of claim' from an RTM company means they intend to take over the management of the building. Thus, it will state:

Note: Landlords can either accept or dispute the claim (see below). The deadline for disputes must be at least one (1) month from the date the notice was issued.

Disputing a 'Notice of Claim'

As a landlord, you have the right to dispute the claim. You would need to serve a counter-notice to the Right to Manage (RTM) company.

The counter-notice must state grounds why the Right to Manage company does not have entitlement to manage the building.

Valid reasons for disputing a notice of claim include circumstances such as the building fails to qualify, or the:

Applying to the Leasehold Valuation Tribunal

RTM company members can apply to the Leasehold Valuation Tribunal (LVT) if they believe the landlord is wrong to dispute their 'notice of claim'.

Applications should take place within two (2) months of the counter-notice date. Leasehold Valuation Tribunals make decisions on whether RTM companies can manage buildings.

Transferring Management to an RTM Company

Management of the building transfers to the RTM company once the landlord accepts the notice (or LVT decides in their favour).

The 'date of acquisition' is the official term used for the date that the Right to Manage company takes over its responsibilities, being (either):

Note: Landlords need to transfer any money received from service charges on the acquisition date (or as soon 'reasonably' possible afterward).

Procedures for Ongoing Management

Most approvals only require fourteen (14) days of advance notice. But, Right to Manage companies must inform landlords at least thirty (30) days before they approve (any):

In some cases, a lease agreement may require consent from a landlord on certain issues. If so, RTM companies must give thirty (30) days of notice to the landlord before they approve (any):

Note: You can read more about leasehold property and the Right to Manage on the Leasehold Advisory Service website.

How Right to Manage (RTM) Works in the United Kingdom