The RTM option is available to you if
- you are leaseholders who own apartments
- your development is self-contained (you share a communal entrance)
- your development includes at least two apartments
- at least two-thirds of the apartments are occupied
- the non-residential (or communal parts) of the building don’t exceed 25% of the total floor area
- at least 50% of the residents are in favour (if it’s unanimous, so much the better, as it saves arguments later!)
There are a number of simple steps you need to go through to set up an RTM Company.
- getting leaseholders on board
- setting up an RTM Company
- appointing the company Directors and Secretary
- invite any leaseholders who are not members of the company to join the company
- serving notice on the freeholder
- when the process is complete, take over management of your property
1 Getting leaseholders on board
To set up a Right to Manage Company a number of simple criteria have to be met.
- more than 50% of the leaseholders must support the move
- two thirds or more of the leaseholders must have leases on their property that were originally of 21 years or longer
- not more than 25% of the floor area must be used for commercial (as opposed to residential) purposes
It is probably a good idea to informally find out if your fellow leaseholders are interested in forming an RTM Company and, if you believe there is sufficient support, arrange a meeting of all the leaseholders. It is a good idea to get letters of support in writing. Once the RTM company is established each leaseholder will be entitled to be a member of the RTM Company. Your freeholder will also be entitled to become a member of the RTM Company and there are complicated rules for determining how many voting rights the freeholder will be entitled to.
2 Setting up an RTM Company
The process of setting up an RTM Company is exactly the same as setting up any other limited company. This can be carried out in 3 ways:
- directly with Companies House
- through an intermediary businesses that offers “off the shelf” companies
- through a legal specialist in the formation of RTM Companies, who can manage the entire legal process for you.
The legal aspects of setting up a limited company can be found at www.companieshouse.gov.uk.
RTM Companies are, however, different from other companies and your application for Right to Manage will not succeed if your company does not fulfil all the criteria for a Right to Manage Company.
Step 3 Appointing the Company Directors and Secretary
Once the company is set up you will need to decide who the company Directors / and Company Secretary are going to be.
- directors of RTM companies have legal responsibilities that can have financial consequences so it is a good idea to seek legal advice prior to agreeing to be a Director.
The Directors of the RTM Company will also need to be elected by the leaseholders. The process of voting in the Directors should be open and transparent and it is advisable to take legal advice regarding the procedure to adopt. Legal obligations of Directors can be found at companieshouse.gov.uk
- the Company Secretary has specific responsibilities in terms of submitting audited accounts to Companies House each year. The Company Secretary can be a leaseholder. However, often the Company Secretary is a representative of the property management company appointed by the RTM Company to manage the property. Legal obligations of a Company Secretary can be found at www.companieshouse.gov.uk
4 Invite any leaseholders who are not members of the company to join the company
The Directors must invite all leaseholders who are not members of the RTM Company to join
5 Serving notice on the freeholder
This is the critical step in the Right to Manage process. It is important that it is done correctly because if an element is missed, the Right to Manage request could be refused on a technicality. The Notice of Claim must be in writing and must:
- specify exactly which block is applying
- provide a statement to show the RTM Company has the support of the required number of leaseholders with the correct leases;
state the full names and address of each member who is both a qualifying tenant of the building and a member of the RTM Company
- provide details of the above individuals
- state the name, company number and registered office of the RTM company
- state a date, not earlier than one month after date of service of the Notice of Claim, by which each person who was given the notice may respond (counter notice)
- specify a date, at least three months after the date for the counter- notice, on which the RTM Company intends to acquire the right to manage the premises
It is important that this notice is produced correctly in compliance with the legislation so it is strongly advised to get specialist advice when putting together the notice.
6 When the process is complete, take over management of your property
The new company formally takes over responsibilities for management of the development. It then has a number of management options:
- it can manage the property directly – but this can be a major task if the block is more than about 6 properties
- it can keep the existing management company
- it can appoint a new management company