The right to manage is a statutory right available to leaseholders of residential flats that allows them to take over management of their building from the landlord, without needing to prove fault on the landlord's part and without needing to buy the freehold. It was introduced by the Commonhold and Leasehold Reform Act 2002 and remains one of the most powerful tools available to leaseholders who are unhappy with how their building is managed.
To exercise the right to manage, the building must be self-contained or a self-contained part of a building, at least two-thirds of the flats must be held by qualifying tenants under long leases, and at least half of the total number of flats in the building must be participating. There is no requirement for the landlord to have done anything wrong. The right exists regardless of whether the current management is good or bad.
The leaseholders must first incorporate a right to manage company, known as an RTM company, under the Companies Act. The RTM company then serves a notice of invitation to participate on all qualifying leaseholders, followed by a claim notice on the landlord and any other relevant parties. The landlord has one month to serve a counter-notice accepting or disputing the claim. If the claim is not disputed, management transfers to the RTM company four months after the claim notice was served.
A landlord can serve a counter-notice disputing the claim on specified grounds, including that the building does not qualify or that the procedural requirements have not been met. If the RTM company does not agree that the grounds are valid, it can apply to the First-tier Tribunal to determine the dispute. The grounds for resisting are limited and a landlord cannot simply refuse to accept the right to manage because they do not want to give it up.
Once management transfers, the RTM company takes over the management functions set out in the lease. This typically includes collecting service charges, appointing contractors for maintenance and repair, managing the common parts, and arranging building insurance. The landlord retains ownership of the freehold and continues to receive ground rent.
Managing a building requires time, organisation, and specialist knowledge. RTM companies often appoint a professional managing agent to carry out the day-to-day work. The company directors, who are leaseholders, have legal duties as company directors and can face personal liability if the company is mismanaged. Getting specialist advice before and after exercising the right to manage helps avoid the pitfalls.
The right to manage allows leaseholders to take over management of their building without buying the freehold and without needing to show fault. The process involves incorporating an RTM company, serving a claim notice, and waiting for management to transfer. A specialist property barrister can advise on whether the building qualifies and guide the RTM company through the claim process.
Getting the right advice early can make a significant difference to the outcome of your case. Reach out to the Barrister Connect team today.