Right to Manage v Recognised Tenants Association

Right to Manage v Recognised Tenants Association – the available options if there is not a registered Management Company in place

Before you go any further, give some thought to how you want the building to be managed in future:

Right to Manage (RTM)

The Commonhold and Leasehold Reform Act 2002 enables leaseholders to require the transfer of the landlord’s management functions to a special company set up by them – the right to manage (RTM) company. The provision applies to leaseholders of flats only (not houses) and does not require the landlord’s consent. It gives the leaseholder the chance to replace a poor manager although mismanagement does not have to be proven. The transfer can be made irrespective of the quality of the current management service.

  • What improvements will RTM enable you to make?
  • Have you identified what is wrong at the moment and prioritised what you want to change?
  • Are the expectations aligned and realistic?
  • Will you be adding value to individual leaseholder investments or just creating a lot of work for a few hardy volunteers?
  • Will the current enthusiasm still be there when there are drains to clear, noisy neighbours to reason with and service charge budgets to account for?
  • There are many boring, repetitive jobs that you will be legally required to do – or to arrange to have done.
  • You will need to give notice to anyone engaged on a long-term contract (over 12 months) be they the current managing agent, the gardener or the door entry system provider. This will apply whether you intend to dispense with their services or re-engage them under the auspices of the new RTM company.

RTM does not necessarily mean self-management; it can be no more than a transfer of responsibility and decision-making.

Recognised Tenants’ Association (RTA)

A tenants’ or residents’ association is a group of owners of leasehold property on the same development who hold similar leases from the same landlord which include provisions for the payment of variable service charges. Collectively an association represents the views of its members. To be effective, formal recognition is required, either directly from the landlord in writing, or by applying to the First Tier Tribunal if the landlord is not willing or ignores the association’s request for recognition.

A certificate of recognition gives the association the legal right to:

  • Request information about service charge costs from the landlord, including accounts and receipts
  • Be consulted on the appointment of a managing agent
  • Be notified by the landlord of proposed major works and receive copies of estimates
  • Nominate contractors to carry out the works, which the landlord must consider
  • Appoint a surveyor for the purposes of a management audit

There are certain conditions and criteria which must be satisfied in order for an FTT to grant a certificate of recognition. Generally, members must be paying a variable service charge to the landlord to qualify as a recognised member, and membership should not be less than 60% of those qualifying for the scheme. However, a recent Upper Tribunal decision also took into account the percentage of overall variable service charges paid by the Associations members.