Why Exercise Your Right To Manage?

What are the benefits of taking on the right to manage?

The main benefit of gaining the right to manage your block (RTM) from your freeholder is that the leaseholders get the full control over the maintenance and any development for their building. This right can be important in situations where it is believed that the current management company or landlord is not doing a good enough job in the upkeep of the building or the common areas.

Having a well-managed block of flats adds greatly to the value of each of the properties and having the right to manage means the value of the flats is now under your control. If you are trying to sell a flat in a block which is managed by a company formed of the leaseholders, then this usually has a higher selling price, as buyers prefer to know they will have control.

There is also often a feeling among leaseholders that without right to manage they could be overpaying on management charges.

Also, in cases where development of the building is needed and the landlord is not prepared to take on that work, the value of your flat might depend on getting the right to manage.

Establishing a Right to Manage Company

Acquiring the right to manage is not something that one leaseholder can do alone. Exercising the right to manage your block means getting at least 50% of the leaseholders in your block to support the move. So it’s not just you who is driving the right to manage; think of it as you and your fellow tenants getting together to create the company. The company will then take care of both the building and its maintenance.

Right to Manage companies in the UK are limited by guarantee rather than being limited by shares. This means that when a flat owned by a participating leaseholder is sold, the RTM company does not have to issue shares to whoever buys the flat.

Exercising Your Right to Manage – the Downside?

There are some disadvantages to establishing a RTM company and it is important to be aware of these. They include:

  •        One tenant will have to step up to act as director of the company. This means taking on additional responsibilities to the other members of the company.
  •        You have to go through the formal process of establishing a right to manage company. This company then takes over from the landlord’s current management company. Tenants have to be prepared for the responsibilities which are part and parcel of right to manage companies.
  •        You can never keep everyone happy. Some tenants might be keen to develop the building and others are against. This creates conflict, and the director of the RTM company might shoulder the blame. All members of the company have to be aware of both the financial and practical responsibilities involved with a RTM company.
  •       The current landlord is entitled to join the company as a member too, and depending on the way in which the company is structured, they might have voting rights to determine what course of action is taken.
  •         Not every tenant will want to get involved with a right to manage company, but if it goes ahead, they will still benefit from everyone else’s labour.
  •        The financial control aspects of company management have to be considered. There’s more to RTM than just arranging to do jobs as needed; you have to monitor budgets and cash flow, and chase up payments from tenants which become overdue. If you are not on top of the finances, this can cause problems which put the company at risk.
  •       Often, the organisation of the finances of the company is often the trickiest area to get to grips with. From the second the RTM company is formed, the participating tenants are liable for any shortfall in monies. Every tenant will have to pay monthly maintenance fees as they do at present, but if one or more of them don’t make payments, then the members of the company can become liable to pay them instead. This responsibility doesn’t just lie with the director – it also applies to every tenant who has become a member of the company.

Want to Exercise the Right to Manage Your Block of Flats? Contact Us Now

Wherever your block is based in England and Wales, we can help. For A FREE initial phone consultation on how to exercise your right to manage your flats;

  • Call us today on FREEPHONE 0800 1404544 for FREE initial advice or
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