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Right to Manage Do Not Try It On Your Own!

Flat owners in a block of flats can collectively take over the management of it (and also in many cases buy the freehold) but whilst in theory this may appear simple in a number of cases where the flat owners have acted in person or not had proper advice the claim has failed because of technical objections made by the landlord/freeholder.

The Common and Leasehold Reform Act 2002 (‘the Act') provides a right for flat owners to take over the management of their building. The right to manage is a non-fault based right, which means that there is no need to prove mismanagement of the building on the part of the landlord and provided the statutory qualifying criteria can be met along with the correct procedure followed the RTM company will have a right to acquire management of the building.

Briefly, the statutory qualifying criteria:-

  • The premises must consist of a self-contained building or part of a building;
  • The premises must contain two or more flats held by qualifying tenants;
  • The total number of flats held by such tenants (qualifying tenant) must not be less than two-thirds of the total number of flats contained in the premises; and
  • The participating qualifying tenants must be of not be less than 50% of the total number of flats, with a minimum of two participating qualifying tenants.

In acquiring the right to manage the RTM company acquires all management functions under the flat leases, for example the provision of services, repairs and maintenance, general day to day management and insurance obligations.

Whilst the right to no-fault based there are still detailed procedures which must be complied with in order to successfully take over the management functions.  A substantial amount of investigatory and preparatory work must be undertaken before an RTM claim can be commenced by formal service of a claim notice on the landlord parties. The various procedural and statutory requirements have proved to continual ground for challenge and source of litigation for landlords trying to resist an RTM claim or at least delay and thwart tenants. 

There are a number of recent cases in which landlords have seized on procedural irregularities and statutory non-compliances. In the case Assethold Limited v 13-24 Romside Place RTM Company Ltd, the Upper Tribunal found that the RTM company had failed to serve valid notices of invitation to participate which rendered the claim notice invalid.

These recent cases highlight the common pitfalls associated with RTM claims and illustrate the level of detail and care than needs to be taken to ensure compliance with the procedural requirements.

July 2016

Katie Mear
Sykes Anderson Perry Limited