By Cassandra Zanelli, Solicitor at Property Management Legal Services and Ibraheem Dulmeer, former Legal Advisor with the Leasehold Advisory Service
June 2016
The Right to Manage (“RTM”) is a popular method by which leaseholders can take responsibility for the management of their blocks. With exercising the RTM, it makes no difference if the landlord’s management has been good, bad or indifferent. However, there may be certain costs implications which are overlooked by leaseholders who decide to invoke the RTM process. We aim to highlight these in this article.
Practical Costs
The RTM is exercised by a limited company, not by individual leaseholders. Therefore, there are costs for forming a RTM Company.
The RTM process will require information to be downloaded from the Land Registry. The overall cost will depend on the number of flats within the block.
There will be postage costs associated with serving: (a) the notice inviting participation on all qualifying leaseholders who are not already members of the RTM Company; and (b) the notice of claim not only on the landlord (and any intermediate landlords, management companies, etc.) but also copied to any qualifying tenants.
Photocopying costs (for example, company documents, if these are being served with the notice inviting participation) should be borne in mind.
Claim Notice Costs
To clarify, the notice of claim must be served on: the landlord, any intermediate landlord, any parties to the lease other than the leaseholders (e.g. management company named in the lease) and on any manager who has been appointed under the Landlord and Tenant Act 1987.
Tribunal Costs
If a landlord RTM Company’s entitlement to exercise the Right to Manage is disputed, the RTM Company can make an application to the First-tier Tribunal (Property Chamber) or the Leasehold Valuation Tribunal in Wales (“the Tribunal”) for a determination that the RTM company is entitled to acquire the right to manage.
Since 3rd March 2025, those served with a claim notice (e.g, landlord and named management company) can no longer automatically recover from the RTM company or members (i.e. participating leaseholders) any reasonable legal or other professional costs they incur as a result of responding to the RTM claim. These will only be awarded if:
- The claim is withdrawn or deemed withdrawn.
- The RTM company acted unreasonably
A court or residential property tribunal expressly orders costs.
