The Commonhold and Leasehold Reform Act 2002 provides Leaseholders with the legal right to change the appointment of the management of their building or estate to another Agent. This is achieved by setting up a 'Right to Manage' (RTM) Company to take over from the Freeholder.
The 'Right to Manage' was introduced, not just as a means of wrestling control from bad Landlords/Freeholders, or Managing Agents, but also to empower Leaseholders, who generally hold the majority of value in the property, to take responsibility for the management of their block.
The process is relatively simple and does not require the Landlord/Freeholder's consent, nor is any order of the court required. Leaseholders do not even need to prove mismanagement, or provide any reasoning for their decision to exercise this right. The right is exercised by way of a formal Notice to the Landlord/Freeholder, called the 'Notice of Claim'. The newly incorporated RTM Company will specify a period of time within the Notice of Claim within which the Landlord/Freeholder may choose to serve a counter-notice. Any counter-notice served by the Landlord/Freeholder must be in the prescribed form and is limited to one of the two following statements:
admitting that the RTM company is entitled to acquire the right to manage; or
alleging that the RTM Company is not entitled and giving reasons to support such an allegations
Do I/We Qualify for the Right to Manage? The building must meet certain conditions and a minimum number of Leaseholders are required to take part:
at least two-thirds of the flats must be leased to 'qualifying tenants'. (a qualifying tenant is a Leaseholder whose lease was originally granted for an original term of more than 21 years')
it can be a part-commercial building, but the non-residential part of the building must not exceed 25% if the total floor area, excluding common parts
RTM does not apply where the immediate landlord of any qualifying tenant is a housing authority RTM does not apply where the premises fall within the Resident Landlord Exemption. To fulfil this exemption would require the following:
The premises must be other than purpose-built (for example a converted house); and
They must compromise not more than four flats; and
One of the flats must be occupied by the Freeholder or an adult member of their family as their only or principal home for the last twelve months. The Right to Manage may only be exercised by a Right to Manage Company and the members of the RTM Company must comprise a sufficient number of qualifying tenants. The required minimum number of qualifying tenants must be equal to at least half of the total number of flats in the building.