Embarking on a Right to Manage (RTM) journey begins with understanding strict eligibility criteria and effectively uniting fellow leaseholders to form a Resident Management Company (RMC) before any notices can be served. This crucial initial phase sets the foundation for a successful claim, empowering leaseholders to take control of their building's management.
Key takeaways
- A building must meet specific criteria, including being purpose-built or converted flats, with at least two flats held by qualifying leaseholders.
- For an RTM claim to proceed, at least 50% of the qualifying leaseholders in the building must agree to participate.
- Forming a Right to Manage Company (RTM Co) is a mandatory first step, requiring Articles of Association and registration with Companies House.
- Effective communication and addressing leaseholder concerns are vital for building consensus and securing the necessary participation.
- Residentive provides clear guidance and tools to simplify the RTM process, from initial eligibility checks to future management.
Understanding Right to Manage (RTM) Eligibility
Before any steps can be taken, it’s essential to confirm if your building qualifies for the Right to Manage. The Leasehold Reform, Housing and Urban Development Act 1993, as amended, sets out clear conditions. Your building must primarily consist of self-contained flats, not merely rooms. At least two-thirds of the flats must be held by qualifying leaseholders, meaning their leases were originally granted for a term of more than 21 years.
Additionally, at least 50% of the total floor area of the building, excluding common parts, must be residential. The building cannot be a local authority building, nor can it have a significant commercial element exceeding 25% of the internal floor area. These criteria ensure that RTM is primarily for residential blocks where leaseholders have a vested interest in management.
What if my building has a mix of residential and commercial units?
If your building includes commercial units, they must not exceed 25% of the total internal floor area. For example, a ground floor shop in a block of flats might be acceptable, but a mixed-use development where half the building is office space would typically not qualify. It’s crucial to accurately measure and verify this proportion to avoid delays or rejection of your claim.
Forming Your Resident Management Company (RMC)
Successfully claiming the Right to Manage requires a specific legal entity: a Right to Manage Company (RTM Co). This company is established solely for the purpose of exercising the RTM. It must be a company limited by guarantee, with its Memorandum and Articles of Association stating its object is to acquire and exercise the RTM.
Each participating leaseholder becomes a member of this RTM Co. Unlike a company limited by shares, there is no share capital; members are instead guarantors for a nominal sum, usually £1. Once formed and registered with Companies House, the RTM Co will be the entity serving notices and ultimately taking over the management of the building.
Mobilising Leaseholders: Building Consensus
Securing the commitment of at least 50% of the qualifying leaseholders is often the most challenging aspect of an RTM claim. This isn't just a numbers game; it requires clear communication, trust-building, and addressing common concerns. Many leaseholders may be wary of taking on responsibility or skeptical about the benefits.
Start by clearly articulating the issues with current management—whether it's opaque service charges, slow repairs, or a lack of transparency. Residentive's 'The 50% Audit' can provide compelling evidence of potential savings and improved service, illustrating how current spend might not be delivering value. Present a clear vision for how RTM, supported by a modern platform like Residentive, can bring control, transparency, and potentially cost efficiencies.
Overcoming common mobilisation challenges
Leaseholders often worry about increased workload, legal costs, or the complexity of managing a building. Address these head-on. Explain that the RTM Co can delegate day-to-day management to a professional entity like Residentive, leveraging AI-led operations, live financial ledgers, and a direct-to-trade contractor network to simplify responsibilities. Share success stories (anonymised, if necessary) or outline the clear steps involved, demonstrating that expert guidance is available at every stage. For tracing absentee landlords, be prepared to outline strategies for engaging buy-to-let owners who may be less engaged.
Residentive: Your Expert Guide to RTM Success
Residentive understands that the journey to Right to Manage can seem daunting. We are committed to empowering leaseholders by providing the knowledge and tools needed to navigate the initial stages of eligibility and mobilisation. Our platform is designed to make the transition smoother, offering unparalleled transparency once your RTM Company is established.
From guiding you through the complexities of forming your RTM Co to demonstrating how future management can be simpler and more cost-effective, Residentive acts as your expert partner. Our goal is to transform the often opaque and reactive world of block management into one of clarity, efficiency, and resident control. The 'Ghosting Era' is truly over when leaseholders have the power to manage their own building with the right support.