Right to Manage Companies

The Commonhold and Leasehold Reform Act 2002 provides the right to leaseholders in flats to transfer the management functions of the landlord to a company of their own, known as a Right to Manage company.

In order to make this transfer, the leaseholders must satisfy certain criteria.

• The Company must be Limited by Guarantee.
• 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.
• 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'. 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; 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.