Right to manage guide

If a block of flats is harmonious it ought to have a residents’ association and it should exercise right to manage as a matter of course.

Otherwise the freeholder appoints his own man. So with a 5-10 per cent investment in a site compared with the value of all the leases, a freeholder makes all the decisions.

The best guide to the process is on the Leasehold Advisory Service website here

Right to manage was given to leaseholders in 2002 by the Commonhold and Leasehold Reform Act. The legislation empowered homeowners to force the transfer of the freeholder’s management functions to a special company set up by them – their own “right to manage” or RTM company.

The right was introduced not only to wrestle power away from poor freeholders, but to give the decision of managing the block to the people it affected most: the leaseholders.

Right to Manage is a technical legal process requiring diligence, accuracy and experience. If the process is disputed, a serious legal wrangle can result.

Many freeholders – and some are substantial companies – have bought the freeholds in auctions and they did not do so just for the ground rents.

They want to monetize these assets, which means controlling the management.

The really sophisticated operators give a good imitation of serving the needs of their clients, the leaseholders, and talking of “transparency” and similar … while practising the precise opposite.

An example of a bitterly contested right to manage is Regent Court, in Plymouth, which is now (October 2013) heading to the Court of Appeal. More here

Also, a bungled contested right to manage application can end up being very expensive as was discovered by Kingsmere Court, Brighton who lost £30,000. More here

If an application is disputed, it is often wise to consider a re-application rather than fight it out in the courts (where freeholders can employ solicitors and barristers who in most circumstances will defeat lay applicants).

Many of LKP’s accredited managing agents, some of which have their own legal departments, can carry out a right to manage application.

They will serve the notifications and carry out the legal work. Often they will do this in exchange for a guaranteed one-year management contract.

It is the most painless way of doing this.

LKP has helped countless sites achieve RTM. Many came to use saying an RTM was impossible: the neighbours did not speak to each other; most were investors who lived elsewhere etc

Here is an inspiring story of Karen Peel who tracked down 133 leaseholders all over the world to win RTM. She is  now buying the freehold as well!

Buying freehold (enfranchisement) is often a far speedier and less problematic solution to a leaseholder/freeholder dispute. But it is costly.