What is Right to Manage (RTM)?
The Right to Manage (RTM) process lets leaseholders take control of their building’s management from the landlord or managing agent. Defined by the UK Commonhold and Leasehold Reform Act of 2002, this process involves setting up an RTM company, a private corporation limited by guarantee, open to all eligible leaseholders.
To qualify, the building must be self-contained, have at least two flats, and use no more than 25% of its area for non-residential purposes. The RTM company then sends notices to all eligible leaseholders who haven’t joined yet, including a Notice of Invitation to Participate and a Notice of Claim.
- Notice of Invitation to Participate: The RTM company must serve this notice to all leaseholders to give them the opportunity to participate in the process
- Notice of Claim: After 14 days from serving the Notice of Invitation to Participate, the RTM company can serve a Notice of Claim on the landlord. This notice starts the RTM process and should include vital information about the RTM company, the building, and the leaseholders involved.
Once the Notice of Claim is received, the landlord has 14 days to acknowledge it. If they wish to dispute the RTM claim, they can issue a Counter-Notice, typically if the building doesn’t meet the RTM criteria.
If there is a dispute, it can be taken to the Property Chamber, which will decide if the RTM claim is valid. If there are no disputes or if they are resolved, an acquisition date is set. This is when the RTM company officially takes over the building’s management, usually three months after the Notice of Claim or the tribunal’s decision.
To conclude, the process involves the landlord handing over all management information such as service charge account, contracts, and maintenance schedules to the RTM company. From that point, the RTM company will assume total responsibility for the building’s management.
This process empowers leaseholders to take control of their building’s management, potentially leading to better service and cost savings. However, commitment from leaseholders is required to effectively manage the building and comply with legal and regulatory requirements.
What is a Resident Management Company (RMC)?
A Residents Management Company (RMC) is a type of organisation often set up in the UK to manage residential properties. They focus especially on multi-unit buildings like apartment blocks or estates. The RMC is typically chosen by the property owners within the development which often elect a board of directors to make vital decisions on behalf of all residents.
An RMC acts on the following duties:
- Upkeep and repair of common areas and facilities, including gardens, hallways, lifts, and parking areas.
- Financial Administration consists of collecting service charges from residents and managing maintenance/repair budgets.
- Compliance: Ensure that the property complies with laws and regulations, Including H&S standards
- Managing insurance policies for building and communal areas
- Leasehold management which involves administering lease terms
What is the difference of RTM vs RMC?
Both RTM and RMC essentially help the residents to gain control of the block. While the terms RTM and RMC are used interchangeably, we think it is not correct as there are quite different legal entities and serve different purposes.
A key distinction is that RTM is a statutory right that allows leaseholders to apply for the right to manage their block, whereas RMC are set up by the developer on completion of the building rather than being a tool to enable leaseholders to gain control of the block.
An RMC is usually a party to the lease (along with the freeholder), with the leaseholders as shareholders in the company.
That means that RMC Directors’ responsibilities are to manage the property on behalf of the freeholder and have control over service charges. In any case, RMCs do not own the freehold.
There are pros and cons for both. For example, an RTM has to adopt specific articles of association and must be a company limited by guarantee with leaseholders being company members rather than shareholders.
How do we help RTM/RMC fulfil their duties?
Helping a Right to Manage (RTM) company and a Residents Management Company (RMC) fulfil their responsibilities will allow them to be more organised and allow them to solve any issue as soon as practically possible.
This can be achieved by having clear communication and training board members to understand their roles, responsibilities, and legal obligations throughout the management process.
Also, it is fundamental to schedule regular meetings to discuss issues, plan maintenance, and ensure transparency.
Other simple ways to help RTM/RMC fulfil their duties are:
- Plan and assess accurate budgets for maintenance, repairs, and other expenditures.
- Routine inspections
- Create long-term maintenance plans to guarantee the good condition of the property
- Maintain accurate records of all meetings, decisions taken, financial transactions, and compliance activities
- Utilise property management software to streamline operations and keep records of all communication and work orders.
- Regularly review the performance of the RTM/RMC also concerning the productivity of the board, management practices and resident satisfaction
By following these protocols and having a smooth process, RTM/RMC can better finalise their duties, ensuring the satisfaction of all parties involved.
FAQ
1. What are the typical responsibilities of a leaseholder in a multi-unit building?
Typical responsibilities of a leaseholder include paying ground rent and service charges, maintaining their own unit, complying with the terms of the lease, not making unauthorized alterations to the property, and not causing a nuisance to other residents. They may also need to contribute to major repairs and maintenance of common areas and the building’s exterior.
2. What should a leaseholder do if they encounter issues with the management of their building?
If a leaseholder encounters issues with the management of their building, they should:
- Review their lease agreement to understand their rights and responsibilities.
- Communicate the issue to the property manager or landlord in writing.
- Follow up if the issue is not resolved in a reasonable timeframe.
- Seek advice from a legal professional or leasehold advisory service if necessary.
- Consider mediation or formal dispute resolution if the problem persists.
3. How can a building manager effectively handle complaints from residents?
- Listen to the complaint carefully and empathetically.
- Acknowledge the complaint and assure the resident it will be addressed.
- Investigate the issue promptly and thoroughly.
- Communicate findings and actions taken to resolve the issue to the complainant.
- Follow up to ensure the resolution is satisfactory.
- Keep detailed records of complaints and resolutions for future reference.
4. What are some strategies for improving communication between building management and residents?
- Regularly scheduled meetings with residents.
- Clear and timely distribution of information through newsletters, emails, or notice boards.
- Establishing an online portal for residents to access information and submit requests.
- Providing multiple channels for residents to voice concerns or ask questions.
- Ensuring transparency in decision-making processes.
- Encouraging feedback and suggestions from residents to improve management practices.