Acquiring the Right to Manage- An overview of the process

If you are a tenant of a residential flat and have the benefit of a long lease (i.e one that was granted for a term of 21 years or more) you may be considering the possibility of acquiring the Right to Manage (RTM).

The first thing to note is that you do not have to prove that the current landlord or management company is at fault. You can apply to acquire the right regardless. The right is derived from the Commonhold and Leasehold Reform Act 2002.

Step 1 – Make sure the building qualifies

  1. It must be self-contained or part self-contained and include at least two flats;
  2. At least 2/3 of the flats must be let to qualifying tenants (qualifying tenants are tenants with leases which were granted for terms or 21 years or more)
  3. The building can be part commercial but the non-residential part must not be more than 25% of the total floor area
  4. It must not fall within the Resident Landlord Exemption which applies to blocks of 4 or fewer flats where the landlord resides in one of them.

Step 2 – Make sure that the requisite number of tenants are on board

In order to acquire the RTM membership of the Right to Manage company must comprise qualifying leaseholders of at least half of the flats in the building. It is therefore suggested that you canvass opinion at the outset in order to make sure that enough of the tenants are on board.

Step 3 – Forming the RTM Company

The RTM is acquired by a company and not individual leaseholders. You therefore need to form a company. There are certain statutory requirements to be satisfied. If the company does not comply with statute it will not be an RTM Company and it will not therefore be able to acquire the RTM. We can assist with this step.

Step 4 – Consider serving an Information Notice

In order to gain a better understanding of what the company is taking on you might want to consider serving an Information Notice on the Landlord.

Step 4 – The notice inviting participation

Notices inviting participation must be sent to all qualifying tenants inviting them to become members of the Right to Manage Company. Again statute prescribes the information that should be included.

Step 5 – The Notice Inviting Participation

Notices Inviting Participation must be sent to all qualifying tenants inviting them to become members of the Right to Manage Company. Again statute prescribes the information that should be included.

Step 6- The Claim Notice

Assuming that the building qualifies, the RTM company is statute compliant and has the requisite number of members the company can serve a Notice of Claim on the landlord.

Step 7 – Service of a Counter-Notice

The landlord has the right to serve a counter notice either admitting that the RTM Company is entitled to acquire the right or disputing entitlement. The landlord may dispute the claim but can only do so either because the building does not qualify; the RTM Company is not statute compliant; or there are insufficient members.

Step 8 – Serve a contractor notice

The landlord is under a statutory obligation to provide information concerning contracts. The RTM company will need to decide whether it wants to retain the services of the various contractors or whether it would like to retain others.

If the landlord disputes the claim but then agrees to the company acquiring the RTM, the date of acquisition will be three months after the date of the landlord’s agreement.

Step 9 – RTM Company to serve a Duty to Provide Information Notice

Service of this notice means that the landlord should provide specific information such as accounts. The landlord must respond within 28 days of notice being served however, the landlord does not have to act until the RTM Company has actually acquired the RTM.

Step 10 – Acquire the RTM

The date of acquisition will be the date specified within the Notice of Claim, if the landlord agrees to the claim or fails to respond.

If the landlord disputes the claim but then agrees to the company acquiring the RTM the date of acquisition will be three months after the date of the landlord’s agreement.

If the claim was disputed but the First Trier Tribunal finds that the company is entitled to acquire the RTM the acquisition date will be three months after the final date of the First Tier Tribunal’s determination.

Need advice? Let us help:

If you would like further information please contact Eleanor Cornthwaite on 0161 761 4611 or alternatively email- eleanor.cornthwaite@whnsolicitors.co.uk.