What is Right to Manage?

Public concern about extortionate service charges and poorly managed buildings led to the Right to Manage (RTM) process under the Commonhold and Leasehold Reform Act 2002.

This gives leaseholders the opportunity to take control over their building by forcing a transfer of the landlord’s management functions to a Right To Manage (RTM) company.

Unlike previous landlord and tenant legislation, leaseholders can change management without having to prove any fault on the part of the landlord.

The Right to Manage company has to be limited by guarantee and must include articles of association, a prescribed memorandum and the acronym RTM in the title.

The benefits of exercising your right to manage include setting service charges, appointing your own managing agent and cutting the hassle of getting consent for things in the lease.

There are also several responsibilities to running a right to manage company:

  • The RTM company must be run like any other limited company, complying with all Companies House formalities such as the appointment of directors and company secretaries as well as the filing of annual returns
  • You must set budgets, service charges and sinking funds for future works
  • You must keep records of payments received from and monies owed to the RTM company by the individual leaseholders
  • The RTM company must obtain buildings insurance
  • You have to adhere to relevant health and safety legislation e.g. fire safety

Written by Simon Masters

Senior Associate Solicitor