Information on Right to Manage Companies

A Right to Manage Company or RTM empowers leaseholders to take responsibility for the management of their homes. The following criteria must be satisfied and considered before any other action is taken.

The building must be self-contained or if part of another building, be capable of being redeveloped independently.
A minimum of two flats must participate.
The premises may be part commercial but the non-residential part must not exceed 25% of the total floor area.
At least two-thirds of the flats must be let to “qualifying tenants” who is a leaseholder whose lease was originally granted for an original term of more than 21 years. There is no requirement for any past or present residence in the flats, nor any limit on the number of flats which can be owned by one person.
The RTM company must be comprised of at least 50% qualifying tenants of the building before it can manage the property. The minimum number of qualifying tenants must be equal to no less than half the total number of flats on the premises.

The Commonhold & Leasehold Reform Act came into effect in September 2003, and provides a right to leaseholders in flats to force a transfer of the landlord’s management functions to a company of their own. The act offers leaseholders a greater degree of security and control but is not simply there to allow the removal of any control from a landlord—good, bad or otherwise. Provided the above criteria is met the landlords consent is not required.

The name of the RTM company must end with “RTM Company Limited” an RTM company is incorporated as a company limited by guarantee with no share capital (non profit making), its Memorandum and Articles of Association must follow a specified form as prescribed by legislation

Whilst Brighton Formations is here to aid and assist you with the incorporation of your RTM company there is a fairly lengthy procedure to be followed before tenants can begin to manage their own affairs and we would advise that specialist legal advice is sought.

Further Information on RTM

A right to manage company can be used for the acquisition and management of premises (referred to as a RTM (company) and the rights to be acquired and exercised are referred to as the right to manage.

Premises which qualify to be owned and managed by a RTM company are:

A self-contained building, ie one that is structurally detached or part of a building (certain conditions have to be met relating to the provision of services and the structure of the building).
Contain two or more flats held by qualifying tenants, and
The total number of flats held by such tenants is not less that two-thirds of the total number of flats contained in the premises.

A company is a RTM company in relation to premises if it is a private company limited by guarantee, and its memorandum of association states that its object, or one of its objects, is the acquisition and exercise of the right to manage the premises.
A company is not a RTM company if it is a commonhold association
A company is not a RTM company in relation to premises if another company is already a RTM company in relation to the premises or to any premises within the premises.
If the freehold of any premises is conveyed or transferred to a company which is a RTM company in relation to the premises, or any premises within the premises, it ceases to be a RTM company when the conveyance or transfer is executed.

MEMBERSHIP AND REGULATIONS

Persons who are entitled to be members of a RTM company in relation to premises are qualifying tenants of flats contained in the premises, and from the date on which it acquires the right to manage (the “acquisition date”), landlords under leases of the whole or part of the premises.
A RTM company may adopt any provisions of the regulations for its memorandum or articles. The regulations may include provisions which a RTM company has not adopted and a provision in the memorandum or articles of a RTM company has no effect if it is inconsistent with the regulations. The regulations effect the memorandum or articles irrespective of the date of the memorandum or articles, but subject to any transitional provisions of the regulations.

The following provisions of the Companies Act 1985 (c. 6) do not apply to a RTM company:

sections 2(7) and 3 (memorandum), and
section 8 (articles).

QUALIFYING TENANTS

A person is a qualifying tenant of a flat if he is a tenant of the flat under a long lease but does not apply where the lease is a business tenancy.

No flat has more than one qualifying tenant at any one time and where a flat is being let under two or more long leases, a tenant under any of those leases which is superior to that held by another is not the qualifying tenant of the flat, and where a flat is being let to joint tenants under a long lease, the joint tenants shall (subject to the existence of a superior lease) be regarded as jointly being the qualifying tenant of the flat.

LONG LEASES

A lease is a long lease if:

it is for more than 21 years, even if it is terminable before then,
it is for a fixed term granted under covenant or obligation for perpetual renewal
it is terminable after a death or marriage,
it was granted under the provisions of the right to buy or under the right to acquire by rent under mortgage,
it is a shared ownership lease, granted by the payment of a premium relating to the value of the premises and where the tenant could receive a sum relating to the value of the premises and, where the tenant’s total share is 100 per cent.
it was granted under the provisions of the right to acquire.

Long leases: further provisions:

A lease terminable by notice after a death or marriage is not a long lease if:
1. the notice is capable of being given at any time after the death or marriage of the tenant,
2. the length of the notice is not more than three months, and
3. the terms of the lease preclude the sub-letting of the whole of the demised premises

A lease granted for a term not exceeding 21 years, but with a covenant or obligation for renewal without payment of a premium and renewed on one or more occasions so as to bring the term to more than 21 years is to be treated as if originally granted for more than 21 years.

Where a long lease:

is or was continued for any period under Part 1 of the Landlord and Tenant Act 1954 (c. 56) or under Schedule 10 to the Local Government and Housing Act 1989 (c. 42,) or
was continued for any period under the Leasehold Property (Temporary Provisions) Act 1951 (c. 38),

it remains a long lease during that period.

Where in the case of a flat there are at any time two or more separate leases, with the same landlord and the same tenant, and the property comprised in one of those leases consists of either the flat or a part of it, and the property comprised in the other lease(s) consists of either a part of the flat or appurtenant property, it shall be taken that a single long lease of the property exists.

CLAIM TO ACQUIRE RIGHT TO MANAGE

Notice inviting participation

Before making a claim to acquire the right to manage any premises, a RTM company must give notice to each person who at the time when the notice is given is the qualifying tenant of a flat contained in the premises, but neither is nor has agreed to become a member of the RTM company.
A notice given under this section (referred to as a “notice of invitation to participate”) must:
1. state that the RTM company intends to acquire the right to manage the premises,
2. state the names of the members of the RTM company,
3. invite the recipients of the notice to become members of the company, and
4. contain such other particulars (if any) as may be required to be contained in notices of invitation to participate by regulations made by the appropriate national authority.
A notice of invitation to participate must also comply with such requirements (if any) about the form of notices of invitation to participate as may be prescribed by the regulations.
A notice of invitation to participate must either be accompanied by a copy of the memorandum of association and articles of association of the RTM company, or include a statement about inspection and copying of the memorandum of association and articles of association of the RTM company, stating where and when the memorandum and articles can be inspected.

NOTICE TO CLAIM TO ACQUIRE RIGHT TO MANAGE

The right to manage any premises is made by giving notice of the claim (referred to as a "claim notice") and the "relevant date", in relation to any claim to acquire the right to manage, means the date on which notice of the claim is given. The claim notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before.
The claim notice must be given by a RTM company which complies with (a) or (b):
1. If on the relevant date there are only two qualifying tenants of flats contained in the premises, both must be member of the RTM company.
2. In any other case, the membership of the RTM company must on the relevant date include at least 50% of qualifying tenants of flats contained in the premises.
The claim notice must be given to each person who on the relevant date is a landlord under a lease of the premises, and a party to such a lease who is not the landlord or tenant, or a manager appointed to act in relation to the premises. Where a manager is appointed a copy of the claim must be sent to the leasehold valuation tribunal or appropriate court
A copy of the claim notice must be given to each person who on the relevant date is the qualifying tenant of a flat contained in the premises.

CONTENTS OF CLAIM NOTICE

Must comply with the following requirements.

It must specify the premises and contain a statement of the grounds on which it is claimed that they are premises to which right to manage applies
It must state the full name of each person who is both the qualifying tenant of a flat contained in the premises, and a member of the RTM company, and the address of the flat.
It must contain, in relation to each person, such particulars of his lease as are sufficient to identify it, including
1. the date on which it was entered into,
2. the term for which it was granted, and
3. the date of the commencement of the term
It must state the name and registered office of the RTM company.
It must specify a date, not earlier than one month after the relevant date, by which each person who was given the notice may reply to it by giving a counter-notice.
It must specify a date which is at least three months after the month reply period, on which the RTM company intends to acquire the right to manage the premises.
It must also contain other particulars (if any) as required to be contained in claim notices by regulations made by the appropriate national authority.

RIGHT TO OBTAIN INFORMATION

A RTM company in relation to any premises may give to any person a notice requiring him to provide the company with any information which is in his possession or control, and which the company requires for a claim notice to acquire the right to manage the premises, and the person has 28 days to provide the information.

RIGHT OF ACCESS

Where a RTM company has given a claim notice in relation to any premises

any person authorised to act on behalf of the RTM company,
any person who is landlord under a lease of the premises,
any person who is party to such a lease but not the landlord, and
any manager appointed to act in relation to the premises,

has right of access to the premises in connection with any matter arising out of a claim to acquire the right to manage.

The right to inspect is exercisable on giving at least ten days' notice to the occupier of any premises to which access is sought, or if those premises are unoccupied, to the person entitled to occupy them.

COUNTER-NOTICES

A person who is given a claim notice by a RTM company may give a notice (referred to as a "counter-notice") to the company no later than the date specified in the claim notice
A counter-notice is a notice containing a statement either admitting that the RTM company is entitled to acquire the right to manage the premises, or alleging that, by reason of a specified provision, the RTM company was not entitled, and containing such other particulars (if any) as required to be contained in counter-notices, as may be prescribed by regulations made by the appropriate national authority.
Where the RTM company has been given one or more counter-notices containing a statement to non entitlement, the company may apply to a leasehold valuation tribunal for a determination that it is entitled to acquire the right to manage the premises.

LANDLORDS ETC. NOT TRACEABLE

Where a RTM company wishes to acquire the right to manage premises but cannot find, or ascertain the identity of, any of the persons to whom the claim notice would be required to be given may apply to a leasehold valuation tribunal for an order that the company is to acquire the right to manage the premises. Such an order may be made only if the company has given notice of the application to each person who is the qualifying tenant of a flat contained in the premises but before an order is made the company may be required to advertise for the purpose of tracing the persons who are landlords under leases of the premises, or parties to such leases but not the landlord or tenant.

WITHDRAWAL OF CLAIM NOTICE

A RTM company which has given a claim notice in relation to any premises may, at any time before it acquires the right to manage the premises, withdraw the claim notice by giving a notice to that effect (referred to as a “notice of withdrawal”).
A notice of withdrawal must be given to each person who is either a landlord under a lease or party to such a lease but not the landlord or tenant, a manager appointed to act in relation to the premises, the qualifying tenant of a flat contained in the premises.

COSTS

General

A RTM company is liable for reasonable costs incurred by a person who is a landlord under a lease of any premises, or party to such a lease but not the landlord or tenant, or a manager appointed to act in relation to the premises in consequence of a claim notice given by the company in relation to the premises.

Costs where claim ceases

This section applies where a claim notice given by a RTM company is withdrawn or at any time ceases to have effect and each person who is or has been a member of the RTM company is also liable for those costs (jointly and severally with the RTM company and each other person who is so liable). It does not make a person liable if the lease by virtue of which he was a qualifying tenant has been assigned to another person, and that other person has become a member of the RTM company.

NOTICES

Any notice must be in writing, and may be sent by post. A company which is a RTM company in relation to premises may give a notice to a person who is landlord under a lease of the premises at the address last furnished to a member of the RTM company as the landlord's address for service, and if no such address has been furnished, the address last furnished to such a member as the landlord's address.

If you have any questions, or wish to speak to one of our qualified staff about your RTM needs, please contact us by telephone on 01273 831 891, email - info@right-to-manage-companies.co.uk or by filling in the enquiry form on our contact page and someone will get back to you as soon as possible.

Right to Manage Companies - Telephone 01273 831891