Advantages and Disadvantages of Right to Manage Companies

There are number of advantages and disadvantages of having The Right To Manage which are set out below.

The list is not exhaustive and we are happy to discuss whether a RTM is suitable for you on an individual basis.

Advantages

  • All qualifying leaseholders in the building have the right to become a member of the Right To Manage company and each member has identical voting powers.
  • The landlord cannot demand financial compensation because the RTM takes control of the building. However the landlord can re-charge his reasonable costs incurred in the handover process.
  • The lessees have control over the day to day running of the building with the associated benefits of potential cost savings. Hence the RTM gives the lessees the right to control the management and administration of the building
  • Only half or more of the qualifying leaseholders must agree to become part of the RTM
  • The RTM allows leaseholders to have the right to manage their block without proving that the landlord or managing agent are running the block inefficiently neither is there the requirement to apply to the Courts.
  • A RTM company does not have shares and therefore when a fat is sold there is not the requirement to issue a new share to the new owner and to cancel the share from the seller. Membership of the RTM is “granted” to all qualifying leaseholders.

Disadvantages

  • The Right To Manage company will require at least one director. The requirement for a company to have a company secretary was removed on 6th April 2008 under the provisions of the Companies Act 2006.
  • The director(s) of the Right To Manage is/are responsible to the members of the RTM to run the company on their behalf. Monies need to be collected from the members of the RTM.
  • The director(s) should run the day-to-day affairs of the RTM in a prudent financial manner. For example there should be a budget in place as well as business plans and cash flows.
  • The RTM will take up the director(s) time.
  • There will always be one or more lessees that do not agree with the way in which the block is being managed and the directors will be criticised.
  • Landlords will be able to recover their direct costs associated with the transfer of the management to the RTM.
  • Obviously not every leaseholder in the block has to join and so those that don’t join will still benefit from any efficiency.
  • The present landlord will be entitled to membership of the RTM and also entitled to vote.

Having set out some of the main advantages and disadvantages of having a RTM you can now decide how you want to proceed:

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Latest News

Great Service

Just wanted to say thank you for doing a splendid job in setting up the Right To Manage company and issuing the notices. Now we feel we are in control of what goes on with the block.

Posted: Thu 16-Jun-2011 12:55PM

Right To Manage

The right to manage (RTM) is available to leaseholders of flats and does not apply to houses. To qualify the building must meet the following criteria and there is a requirement to have a minimum number of leaseholders; -at least two thirds of the flats must be let to ‘qualifying tenants’ i.e. held on leases which were originally granted for more than 21 years. -any commercial area does not exceed 25% of the total floor area -RTM does not apply to premises that are classed within Residential Landlord Exemption i.e. the premises cannot be purpose built, be no more than 4 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 12 months

Posted: Tue 08-Feb-2011 4:04PM

Right To Manage Company Formation

As the right to manage is exercised by the right to manage company and not the individual leaseholders it is necessary to incorporate a right to manage company. The articles are prescribed by legislation and are based on the Companies Act 2006 model articles for companies limited by guarantee. Right to manage companies incorporated after 9th November 2009 will have articles that comply with current legislation. Right to manage companies incorporated before 8th November 2009 will have the ‘old style memorandum and artilcles’ and there is therefore a transition period until 30th September 2010 at which point the Companies Act 2009 artilces will aply to all right to manage companies regardless. If you require any help in incorporating a right to manage company please call Brighton Company Formations Limited on 01273 831891

Posted: Mon 19-Jul-2010 4:24PM

Why use a Right To Manage?

The Commonhold and leasehold Reform Act 2002 provides a right for leaseholders to change the appointment of the management of their building to another provider, by incorporating a right to manage company to take over from the freeholder those rights of appointment for managing the building. Some of the reasons to use a right to manage company is to reduce service charges and to gain control of who manages the block of flats. Right To manage Company can help you with the right to manage process so please call us on 01273 831891

Posted: Fri 02-Jul-2010 11:02AM

Control your service charges

If you live in a block of flats or a house converted into flats you can take control of your service charges by forming a right to manage company. Three conditions must be met: at least half of th eflat owners must consent, at least three quartres of the building must be residential and at least two thirds of the flats must have long leases. Please feel free to contact Right To Manage Companies on 01273 831891.

Posted: Fri 02-Jul-2010 10:45AM

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