Some frequently asked questions can be found answered on the webpage of the consultancy we are planning to use in the process - https://thertmcompany.co.uk/faqs
1. What is Right to Manage (RTM)?
Right to Manage (RTM) is a legal right that allows leaseholders of a building to take over the management of their property from the landlord or managing agent. This means leaseholders can make decisions about how the building is maintained, how service charges are spent, and which contractors are used.
2. Why are we pursuing RTM?
We are pursuing RTM to gain greater control over the management of our building, ensure financial transparency, improve the quality of services, and potentially reduce costs. By managing the building ourselves, we can make decisions that best reflect the needs and preferences of our community.
3. Who is eligible to participate in RTM?
To participate in RTM, at least 50% of the flats in the building must be held by qualifying leaseholders. Typically, leaseholders must have long leases (usually more than 21 years) for their properties. If these criteria are met, leaseholders can form an RTM Company to take over management responsibilities.
4. How does the RTM process work?
The RTM process involves several steps:
Forming the RTM Company: Creating a legal entity to manage the building.
Serving Notices: Sending a Notice of Invitation to Participate to all qualifying leaseholders and a Claim Notice to the freeholder.
Handling Responses: Addressing any challenges from the freeholder.
Transitioning Management: Handover of management responsibilities from the freeholder to the RTM Company.
Engaging a Management Company: Appointing a professional management company to handle day-to-day operations.
5. What are the costs associated with RTM?
Costs associated with RTM include consultancy fees for setting up the RTM Company, legal fees for preparing and serving notices, and possible tribunal costs if the claim is challenged. Ongoing costs include fees for the management company, maintenance, insurance, and utilities. We will also need to maintain a contingency fund for unexpected expenses.
6. How will the RTM Company make decisions?
The RTM Company will make decisions through regular meetings where leaseholders can vote on important matters such as budgeting, major repairs, and contractor selection. The management company will handle daily operations, but the RTM Company will retain control over significant decisions and financial oversight.
7. What happens if the freeholder challenges the RTM claim?
If the freeholder challenges the RTM claim, the matter may be referred to a tribunal. The consultancy will assist us in managing any disputes and provide support throughout the tribunal process. The tribunal will decide whether the RTM Company has the right to take over management.
8. How will financial oversight be handled?
The RTM Company will oversee the building’s finances, including approving budgets and monitoring expenses. The management company will provide regular financial reports, and the RTM Company will ensure that all funds are used appropriately and transparently.
9. How do we get involved in the RTM process?
Leaseholders are encouraged to participate in the RTM process by joining the RTM Company, attending meetings, and voting on key decisions. Information on how to get involved will be provided throughout the process, and all residents will have opportunities to contribute to decision-making.
10. Do we still get the concierge service?
Yes, all block management function are now undertaken by the new managing agent. Rendall and Rittner will retain the management of the wider Peartree development, to which you are still obliged to pay service charge contribution for the estate charges and car park (if applicable). The onsite team will still continue to provide parcel and key holding services to all residents of Gosling Lodge for instance (they've gone on RTM already), as well carrying out external security patrols and litter picking (to the estate areas and car parks only). Everything else will be managed by the new management company, unless agreed otherwise.
11. Does going RTM affect my lease?
No, going through the RTM process does not alter the fundamental terms of your lease, such as its duration or your financial obligations like ground rent. However, it does give you and other leaseholders greater control over the management of the building, which can lead to improvements in how the property is maintained and how service charges are handled. This increased control comes with added responsibility, especially for those who become actively involved in the RTM company.
12. What if I’m against setting up RTM and do not want it?
If you’re against setting up the Right to Manage (RTM), you’re not obligated to participate, and your lease rights remain the same. However, if the majority supports RTM, it will proceed, and the RTM Company will manage the building, including your property. You won’t be involved in decision-making, but it’s important to stay informed. You can address concerns with others or seek legal advice, and it may be worth exploring alternative management options.
13. If I change my mind, can I join the RTM Company later?
Yes, you can join the Right to Manage (RTM) Company later, even if you choose not to participate initially. If you decide to join after the RTM has been established, you can apply to become a member of the RTM Company. This would allow you to have a say in the management decisions and be more involved in the oversight of the building. Keep in mind that you may need to contribute to the costs associated with the RTM, even if you join later.
14. Who can join the RTM Company? How does it work with joint lease?
Any leaseholder with a long lease (usually over 21 years) can join the RTM Company. If a flat is owned jointly, all joint leaseholders can become members, but they collectively have only one vote. To join, joint leaseholders apply for membership and then participate in meetings and decisions. Also joint leaseholders can decide for just one of them to join the RTM Company. That person would then represent their flat and have one vote on behalf of all the joint owners.
15. What would be the day-to-day workload/engagement for leaseholders in an RTM compared to the current situation?
Active engagement is required from a majority of leaseholders to initiate RTM, but ongoing participation is optional for individual leaseholders after the right is established. Once the RTM company takes over management, all qualifying leaseholders have the right to be members of the company and participate in decisions regarding the building’s management. Leaseholders will have the opportunity to influence decisions related to service charges, repairs, maintenance, and the selection of contractors or managing agents. Leaseholders who wish to be involved in the management of the building can become directors of the RTM company. Directors are responsible for managing the building or appointing a managing agent to do so. Members of the RTM company can remain passive, voting only on key decisions at general meetings or choosing to leave decision-making to the directors. Even if not actively involved, leaseholders who are members of the RTM company retain voting rights. This means they can still participate in significant decisions (such as appointing new directors or changing managing agents) by attending annual general meetings or extraordinary meetings if they wish. Ongoing active involvement is optional. Many leaseholders may prefer to remain passive members, leaving decisions to the company’s directors. Active roles are primarily held by directors, who manage the building or in our case appoint professionals to do so.
17. How much it would cost to move to an RTM and how much we’d save in service charges compared to the current situation?
At the initial estimation the overall cost of establishing RTM will be around £6200 (as we continue the consultation, the figure may change and accurate figure will be shared in our newsletter and on the RTM proposal), similar block as ours in GMV East have had their first year budget difference with a win over £50,000. Based on this, we will win back the setup costs in few months.
18. What will happen to the nursery and potential cafe/market suite? I assume they’re still with R&R then?
The Right to Manage is primarily designed for residential leaseholders. However, it does apply to the entire building, which means that if the building contains both residential and commercial units, the RTM company typically takes over the management of both residential and commercial parts. Commercial property owners are not qualifying leaseholders for the purpose of RTM. This means that they do not have the right to join the RTM company or participate in the process. However, once the RTM is established, the RTM company will take over the management responsibilities for the entire building, including the commercial units, unless the lease or other legal arrangements specify otherwise. Once the RTM process succeeds, the RTM company takes over the management of the entire building, including commercial parts, unless those parts are excluded by the lease or another legal arrangement. If the commercial units are excluded, they may stay under the current managing agent or be managed separately, but this would be unusual.
19. Are shared ownership leaseholders eligible to vote and participate?
Yes, shared ownership leaseholders can vote in the Right to Manage process, provided they hold a long lease. The percentage they own under the shared ownership agreement does not affect their voting rights. If the shared ownership arrangement involves a housing association or another landlord that owns the remaining percentage of the property, the housing association or landlord does not get a vote. Voting rights are reserved for the long leaseholder (the shared ownership tenant), as the RTM process is designed for residential leaseholders.
20. Who should we contact if we have more questions?
For additional questions or more information about the RTM process, please contact us at email@block202.co.uk.