Your Right To Manage Your Property
The Commonhold and Leasehold Reform Act 2002 provides a right for leaseholders to force the transfer of the landlord's management functions to a special company set up by them known as "The Right to Manage Company". It was introduced, not just as a means of taking control from bad landlords, but to give leaseholders the power to take responsibility for the management of their block.
The right to manage is available to leaseholders of flats, but not houses.
The process is relatively simple. The landlord's consent is not required, nor is any court order. There is no need for the leaseholders to prove mismanagement by the landlord and it is available whether the landlord's management has been good, bad or indifferent.
The right is exercised by the service of a formal notice on the landlord. After a set period of time, the management transfers to the right to manage company (the RTM company) which has been set up by the leaseholders. Once the right to manage has been acquired, the landlord is also entitled to become a member of the company.
It makes sense for the leaseholders to take general control of the upkeep of their flats, but to do so will bring with it duties and liabilities. In acquiring the power to make approvals and to enforce the covenants of the leases, the leaseholders become responsible for all decision making in terms of budgets and reserve funds, standards of management and provision of services, repairs and major works, and with the overall function of the building.
The day to day management may be best left to a professional managing agent. Management is a job which requires certain skills and experience and carries with it great responsibility.
A responsible attitude to the long-term maintenance aspects must be adopted by the RTM company as the building remains in the landlord's ownership and the flats remain the leaseholders' principal financial assets. The RTM company cannot save money by reducing essential services or by allowing the block to deteriorate. The covenants in the lease (which will not be changed in the exercise of the right) should specify service provision and require the property to be maintained as it becomes necessary, not when convenient.
The RTM company will be required, like any other landlord, to comply with a Government approved code of management practice. There are two such codes, one produced by the Royal Institution of Chartered Surveyors (RICS), and one by the Association of Retirement Housing Managers (ARHM) which refers specifically to purpose-built retirement property. While compliance with the codes is not mandatory, failure to do so is one of the grounds for an application to the Leasehold Valuation Tribunal to appoint a new manager or to end the right to manage.
The right to manage is an opportunity for leaseholders to run their own affairs and to make their own decisions about the management and upkeep of their flats.