Can Tenants Jointly Create A Right To Manage Company?

The services on your block of flats are of a poor standard and your landlord overcharges. You are not happy with it and neither are your fellow tenants.

One of the tenants suggests consulting a specialist solicitor with a view to forming a right to manage company and over the management yourselves.

This sounds like a brilliant idea. However, before you do, taking over the management will impose important responsibilities so get wise to some of these before consulting a lawyer about exercising your right to manage leasehold property.

Some of the issues to think about when considering right to manage (often called RTM) are:

- the leaseholders must manage the building via a right to manage company which means understanding legal procedures for company formation.

- the leaseholders - who will then have the role of officer of the new right to manage company - must wish to be involved for the long haul.

- these officially designated people will consist of directors, a chairman and company secretary; they will have to carry out all the tasks which usually belong to company directors and landlords.

- the right to manage company must be open to and available for critical comment from remaining leaseholders in the same way as the landlord has been.

- regular meetings must be held to keep company communications up to date.

- bookkeeping, accounts, legal requirements and other essential criteria must be checked.

- prompt payment of charges by leaseholders is essential to maintain solvency of the RTM company.

- any problems or conflicts between fellow leaseholders must be handled correctly.

- you will need to be in line with different company, health & safety and housing laws.

- an awareness is built of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). This is to protect the rights of employees when a transfer situation arises.

Naturally, your lawyer will help clarify these points and give valuable support. It is sensible to find yourself an experienced RTM lawyer who is a specialist in this area of the law and can provide you with accurate straightforward advice.

The right to manage is a positive opportunity for tenants (the leaseholders) who actually own most of the value in the building to control their own affairs. They will be directly involved in decision-making about the management and maintenance of their flats. Imagine how good it will feel when your service charges fall and yet you find you have vastly improved service!