Statutory RTM- Right to Manage- 2002 Act

[Robin]

Not so much a question as a tip.

This is good way to deal with unscrupulous freeholders, provided your leases have a decent unexpired term left & they are not defective in regards to maintenance obligations.
The freeholder on one of my buy to let flats was ripping off myself & the other leaseholders & sending letters threatening court action if we didn't pay maintenance money to him. The only thing was, he never did any maintenance !
He even found out from the land registery who our mortgages were with, then wrote to our mortgage lenders asking them to send us letters telling us to pay him.
The block became very tatty in the process.

Under recently introduced legislation, I managed to get 5 out of 9 leaseholders to agree to go the 'Right to Manage' route, as a majority is needed. Now the freeholder is only entitled to £15pa ground rent.
Via the 'right to manage' company we formed & inwhich we all have shares, we've appointed a good managing agent.

[LHNM]

Out of interest, how much did the process cost you all, and did you encounter any resistance from the landlord?

[Tax Accountant]

Out of interest, how much did the process cost you all, and did you encounter any resistance from the landlord?

And as a matter of interest, did you consider buying the freehold itself?

[Dolly]

We are thinking of starting a RTM initiative. There's some things I can't quite work out.

1) Can the organisers be non-resident leaseholders?

2) Can I start an RTM initiative, with a view to running it as a proper business, ie, charge commission, make a profit and take a salary?

I'm not saying I want to start an empire, just that I wouldn't mind doing it if I was given some sort of financial reward for my time. I already play a large part in 'managing' the flats, because of our incompetent landlord.

There are 42 flats.

Thanks
Dolly

[thevaliant]

1. As I understand it, yes. Indeed, the managing agent doesn't even need to be a leaseholder.

2. You would charge a fee/salary/whatever for your time. If you are a director of the company then it would presumably be a fee. The tax implications are that this is income declarable to the Revenue.

[jeffrey]

See Chapter 1 in Part 2 of 2002 Act. Membership is limited to "qualifying tenants" and lessees sub-letting: see s.74(1). Its Articles of Association must comply with statutory requirements- s.74(2)- which might allow payment of a salary/honorarium.

[sgclacy]

Some care on the taxation implications as pointed out by the valiant.

If you act as the managing agent I would suggest you are not a director of the RTM for two reasons:-

1) It is important that you are seen as independant in the lessees eyes

2) Payment made to you as agent could very easily be seen as directors remuneration and attract Employers NIC and a raft of compliance issues

[Dolly]

A lot of the information on the Right to Manage is written by solicitors or managing agents who obviously want your business.

They say - "do it yourself at your own risk!... If you mess it up then you can't start another RTM initiative for four years!"

This is probably the wrong place to be asking the question, but is the DIY route really that difficult?

[sgclacy]

A lot of the information on the Right to Manage is written by solicitors or managing agents who obviously want your business.

They say - "do it yourself at your own risk!... If you mess it up then you can't start another RTM initiative for four years!"

This is probably the wrong place to be asking the question, but is the DIY route really that difficult?


If you make a mistake setting it up the worse is that there will be a delay of a few months whilst you go through the correct procedure.

If once having set it up it then fails then you would be precluded from setting up an RTM for four years

[jeffrey]

Yes. The four-year rule is in paragraph 5(1)(b) of Schedule 6 to 2002 Act (which Schedule lists cases excluded from RTM's scope).

[SouthCoaster]

We went through a company called Canonbury Management and they were good, to say the least! Very easy to do, cheap and were also able to supply some pieces of useful advice here and there too....

I have a question which I wondered if someone from the forum may be able to assist with..

Our premises is 5 x leasehold flats and two commercial premises.

We have had long standing issues with the management, and as such some of us (well all, bar one) have refused to pay the management fees. This has not been challenged at all, and now we have acquired the RTM.

We all talk to each other with the exception of one flat, and I don't know if she was still paying the former management company or not. I know where most of us stand, but not this owner. Question is, as this is a new management company - do the records start fresh? Do the accounts start all fresh? Only, if this leasholder has paid her money in full then it would be ethically wrong to then send her a further service charge request?

I look forward to your response, and hope that my query is clear enough!!:confused:

- - BTW we have not recieved financial handover from the former management company as yet - so have not seen the accounts.

SC

[jeffrey]

Hello all,

New to the forum - having just recently succesfully acquired the right to manage!

I'm hoping to pick a few brains on the forum, and contribute where I can but my knowledge is pretty basic.:D
Really, the solicitor who handled your RTM should be providing this advice as part of his/her service!

[Preston]

Hi all,

Along with some follow leaseholders, I am just about to set up Right to Manage company to take on the management of a block of 6 flats:

a) I appreciate that this is a bit of a "how long is a piece of string question" but any thoughts on what the reasonable costs of the landlord and, separately, the existing managing agent might be? The managing agent, by the way, is nominated as such in the lease.

b) there are other blocks of flats nearby owned by the same freeholder, let on identical leases and managed by the same agent. There is insufficient interest in those blocks to pursue the RTM at present, but is there a way of setting up the RTM company so that it can take on other blocks in the future if sufficient interest develops?

Thanks for any help you can give.

Preston

[jeffrey]

On point (b):
i. I suppose that the RTMC's Memorandum/Articles can extend to other blocks' possible future inclusion; but
ii. Parliament does tightly prescribe the wording of them and may already have prohibited such additions.

[Preston]

On point (b):
i. I suppose that the RTMC's Memorandum/Articles can extend to other blocks' possible future inclusion; but
ii. Parliament does tightly prescribe the wording of them and may already have prohibited such additions.


Hi, thanks for the comment. I have looked at the prescribed form of the Mem and Arts and I am not sure I will take the risk. They seem to allow for the possibility that the company will not necessarily manage the entire premises to which they relate; but I am not sure and cannot find any tribunal decisions of relevance.

[Gordon999]

If the site has 2 blocks , then each block must form its own RTM company.

But both RTM cos can appoint the same company to manage the service charge account.

[ISL]

Hello everyone; I stumbled across this forum while investigating Right to Manage. I am not sure if this query is in the right place, so apologies in advance if it is not!

My neighbour has gathered up the leaseholders of the block of flats I live in and, due to dissatisfaction with the current service from the Management Company, she is talking about managing the block of flats ourselves.

The block qualifies under the rules of the legislation.

It is a small block of just four flats; everyone is keen to manage the property ourselves and we 'kind of' have a grasp of how to go about it, (and I would probably recommend approaching a professional company to manage the RTM process).

The query I have is in regards to Section 73 of the Act. It says:

73 RTM companies
(4) And 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 containing or contained in the premises.

Our block of four flats is part of a larger development, which comprises 2 other much larger blocks, (probably 50-odd flats in each block) and a RTM Company was formed to manage all three blocks. It specifically refers to our block in it's Memorandum and Articles of Association.

Due to the size of these blocks they appointed a Management Company - the Company that we want to get away from, as, being a small block, we feel neglected and works that should be getting done are not.

But can we do our own RTM in light of there already being an RTM Company in existence? I am not sure what our options are? Any advice or comments would be greatly received.

[sgclacy]

I beleive your block would qualify to enable you to set up an RTM

The block has to be self contained and detached, if it is not detached the block can still set up an RTM if the part that is being considered is capable of vertical division.

[jeffrey]

Belwo, I set-out s.72 of the 2002 Act, referring to chapter 1 ("Right To Manage") in Part 2 ("Leasehold Reform").
Was the existng company a formal RTM Company under s.73 of this Act? If it was, para. 5 in Schedule 6 bars a second RTM.

72. Premises to which Chapter applies

(1) This Chapter applies to premises if:
(a) they consist of a self-contained building or part of a building, with or without appurtenant property,
(b) they contain two or more flats held by qualifying tenants, and
(c) the total number of flats held by such tenants is not less than two-thirds of the total number of flats contained in the premises.

(2) A building is a self-contained building if it is structurally detached.

(3) A part of a building is a self-contained part of the building if:
(a) it constitutes a vertical division of the building,
(b) the structure of the building is such that it could be redeveloped independently of the rest of the building, and
(c) subsection (4) applies in relation to it.

(4) This subsection applies in relation to a part of a building if the relevant services provided for occupiers of it:
(a) are provided independently of the relevant services provided for occupiers of the rest of the building, or
(b) could be so provided without involving the carrying out of works likely to result in a significant interruption in the provision of any relevant services for occupiers of the rest of the building.

(5) Relevant services are services provided by means of pipes, cables or other fixed installations.

(6) Schedule 6 (premises excepted from this Chapter) has effect.

...

Paragraph 5 of Schedule 6: Premises in relation to which rights previously exercised

(1) This Chapter does not apply to premises falling within section 72(1) at any time if:
(a) the right to manage the premises is at that time exercisable by a RTM company, or
(b) that right has been so exercisable but has ceased to be so exercisable less than four years before that time.

(2) Sub-paragraph (1)(b) does not apply where the right to manage the premises ceased to be exercisable by virtue of section 73(5).

(3) A leasehold valuation tribunal may, on an application made by a RTM company, determine that sub-paragraph (1)(b) is not to apply in any case if it considers that it would be unreasonable for it to apply in the circumstances of the case.

[1966bobby]

Hello I have been trying to start a RTM in our flats and have just had a counter notice (the second time) I think the problem is my wording of
(2.The Company claims that the premises are ones to which Chapter 1 of the 2002 Act applies on the grounds that...)

I have put that it is: 'a detached self contained block of flats seven out of eight of the tenants are members of the company. There are 99 years left on an 125 year lease. We are a private company limited by guarentee. Our Memorandum of Association states that our object is the acquisition and exercise of the right to manage the premises.'
The solicitors counter notice sites 75,76,79, and 80 of Chapter 1 of Part 2 of the Act.
I can not find any example of a completed Notice Claim anywhere, can anybody help ?
Thanks Bobby

[leaseholdanswers]

I think that you notice of claim does not comply with those sections involving notice of claim, qualifying leaseholders, premises etc.

You will find these here.http://www.legislation.gov.uk/ukpga/2002/15/notes/contents

As a notice needs familiarity with you and the block, leases etc, if you are still struggling perhaps you need to take paid for advice.

[jeffrey]

The solicitors counter notice [c]ites 75,76,79, and 80 of Chapter 1 of Part 2 of the Act.
Here they are: http://www.legislation.gov.uk/ukpga/2002/15/part/2/chapter/1
Did your Notice comply with their requirements re information?

[1966bobby]

Hi Jeffery
thanks for info but I am still not getting it. May I ring you with a view to getting some paid advice
Thanks Bobby

[Gordon999]

Does the name of your company include " Name of block + RTM Limited" ?

[1966bobby]

Hi Gordon yes, it is Right To Manage Ltd at the end of its title