Right to Manage Companies

The Commonhold & Leasehold Reform Act 2002 came into effect on September the 30th 2003 and provides a right to leaseholders in flats to force a transfer of the landlord’s management functions to a company of their own – a Right To Manage company, or RTM. This empowers leaseholders, subject to the satisfaction of certain criteria, to take responsibility for their homes’ management and is not simply there to allow the removal of any control from a landlord – good, bad or otherwise!

The right is only open to leaseholders of Flats, not Houses.

So long as the relevant criteria are met, the landlord’s consent is not required and neither is any reversion to the courts or a tribunal although there is a fairly lengthy procedure to be followed and specialist legal advice should be sought. We can, however, register a company in the appropriate format for use in any such procedure.

The right is exercised by serving a formal written notice upon the Landlord who may, after the appropriate periods of time have elapsed, become a member of the new company himself once the right to manage has been acquired. 

Our comprehensive package includes the following:

The criteria that must be satisfied, and considered before any other action is taken, are as follows:

• The building must be self-contained (or if part of another building, be capable of being redeveloped independently) 
• It must include at least two flats
• At least two-thirds of the flats must be let to 'qualifying tenants' *
• It can be part-commercial but the non-residential part must not exceed 25% of the total floor area
• The right to manage may only be exercised by a right to manage company and the members of the RTM company must comprise a sufficient number of qualifying tenants. The required minimum number of qualifying tenants must be equal to at least half the total number of flats in the building
• The right relates to a building, so, in an estate of separate blocks, each block would need to qualify separately and an individual RTM notice served. In the case of an estate of flats under the same management, it would be sensible to take over the management of the whole estate, but this would have to be accomplished by application in respect of each separate block

* A 'qualifying tenant' is a leaseholder whose lease was originally granted for an original term of more than 21 years. There is no requirement for any past or present residence in the flats, nor any limit on the number of flats which can be owned by one person.

Once formed, the Company must formally invite any leaseholders that did not participate in the formation of the Company to become members.

The Company itself must be limited by guarantee and not have a share capital and its Memorandum & Articles of Association must follow a specified form as laid down by the legislation.

The only changes to the specified format that are allowed are the insertion of the name of the Company and the full address of the property to be managed. The name of the Company must end with the suffix "RTM Company Limited" which should normally be prefixed with a description of the property itself. For example, if we were allowed to do so and were a residential block, our address as inserted into the Memorandum of Association would be:

788-790 Finchley Road, Temple Fortune, London, NW11 7TJ

and the name of the Company could be:

788-790 Finchley Road RTM Company Limited

In order for us to assist with the registration of the new RTM company, we will need to ask you to have a simple questionnaire completed to ensure that it is appropriate to proceed on this basis. Thereafter, we can register the Company with the Registrar of Companies with either our nominees as the initial officers and members or, as is more common, with some or all of the leaseholders in those positions. Formation takes approximately 5 or 6 working days from the submission of the requisite papers at Companies House.

Company Formation with Fast Track Business Bank Account

We have an exclusive agreement with Barclays Bank PLC to open business bank accounts simultaneously with the formation of new companies. Click here for full details.

How to Order

To order a Right To Manage company with or without a fast track business bank account please contact us via our enquiry form or call us on    020 8458 9637  .