In certain circumstances leaseholder can acquire the right to manage of their flats by virtue of a Right to Manage Application pursuant to The Commonhold and Leaseholder Reform Act 2002.
There are many reasons why leaseholders may wish to exercise their right to make an application for the right to manage but more often than not it is down to being unhappy with their current management regime and wanting an element of control.
The good news is that the right to manage is a no fault procedure, meaning that as long as leaseholders satisfy the qualifying criteria and follow the process then they will acquire the management.
This article is not meant to provide a detail aid to the process but merely over an overview in order to families those reading with the RTMs. Those considering making an application should seek legal advice as any errors could invalidate the application and also be very costly as Landlords have an automatic right to their reasonable legal costs when dealing with an application.
The first thing that must be considered by those wishing to proceed is do I Qualify?
The legislation outlines all of the qualifying criteria for not only the leaseholders but also the premises to which you may wish to acquire.
In order to be what is known as a ‘qualifying tenant’, the leaseholders must be a leaseholder where their lease is granted for a term more than 21 years.
In order for the building to be classified as a ‘qualifying premises’ then any commercial parts must not exceed 25% of the total floor area, you may wish to consider instruction a specialised surveyor to assist with this. Two thirds of the flats must be let to qualifying tenants and you cannot exercise your right if you Landlord is a Local Housing Authority.
One you are satisfied that you have met the necessary criteria then you need to consider next steps and gaining support from you fellow leaseholders.
In order for you to proceed then you will require at least half of the total the qualifying tenants to be on board with the process. If you do not have at least half of your leaseholders supporting, you then you cannot proceed. Please note that this means that you will need support per a flat so if there are 10 flats you will need 5 flats supporting you.
One you have the support you can move on to setting up a RTM company. There are a number of internet based companies that can set this up you and also have specialised Memorandum of Articles of Association needed for an RTM Company.
Now that the Company has been set up you must invite all of the leaseholders to become a member of the company.
These invitations are referred to as a Notice Inviting Participation and that have a prescribed form that must be followed. Please note that if the prescribed form is not used and not all of the leaseholders are invited then this will likely invalidate your claim.
As mentioned early on in this article, although this is a no fault process, any errors when following the procedure could be fatal to your claim, as such it is very important that you take great care in ensuring that all the necessary information is included in the Notices Inviting Participation.
All of the leaseholders that respond wishing to become a member must be added to the RTM Companies member register.
Now that you have the necessary report the nest stage is to consider actually serving the Notice of Claim to exercise the right. Again the Notice of Claim is prescribed and the information required must be strictly adhered to.
It is very important that you serve this on the right party with the necessary information because as soon as the Notice of Claim has been served you are liable for the Landlords reasonable costs in dealing with the Notice.
You therefore can make a request for information from the Landlord to help with obtaining information and finding out where to send the notice.
On some occasions depending on the legal set up of your building need to serve the notice on parties other than your Landlord. These can include any intermediate landlords if let’s say there is any head leases in play and also any parties named in the leases such as a management company.
Once you are happy and you serve the Notice of Claim you must also send a copy to all of the qualifying tenants at the building, so all of the leaseholders must be sent a copy.
The deadline given on the Notice of Claim for the Landlord to respond must be not earlier than one month from the date of service.
The Notice of Claim will also include a date for the actual hand over of the management, this must be included and must be a date at least three months after the date that the Landlord can respond with a counter notice, this is often referred to as the acquisition date.
Therefore, you should acquire the right to manage roughly 4 months after service of your Notice of Claim.
Although people are often keen to acquire the management as soon as possible, you should consider giving a few extra days in order to avoid any potential arguments on the dates as any errors could invalidate the Notice of Claim.
The Landlord will then have their deadline to respond by with a Counter-notice and they will either allow the RTM company to take over the management or they will refuse that the RTM company is entitled to take over the management and give their reasons.
Upon receipt of a Counter Notice refusing to hand over the management the RTM Company has two months from the date of the Counter Notice to make an Application to the First- tier tribunal Property Chambers to have them determine if the RTM Company is entitled to the Right to Manage.
Please note that if the Landlord does not respond or misses the deadline then the RTM Company is entitled to the management on the acquisition date.
As mentioned the RTM Company will be liable for the Landlord’s reasonable costs in dealing with any Notices of Claim and this is something that should be considered when budgeting for the process.
To reiterate although this is a no fault process, errors made in the process can invalidate the application resulting in you not acquiring the right to manage and also paying the Landlords costs.
You should seriously consider taking legal advice when embarking on this process.