News story

New forms on Right to Manage companies

Companies being formed to enable leaseholders to take over the management of their block of flats (RTM companies) will need to serve a Notice Inviting Participation and a Notice of Claim in the form prescribed by a new Statutory Instrument to take effect on 19th April 2010.

By no later than the date specified in the Notice of Claim the landlord may serve a counter-notice in the form prescribed by the new Statutory Instrument.

The content of the notices are prescribed by the government and are available on the Office of Public Sector Information website.

The right to manage (RTM) introduced by the Commonhold and Leasehold Reform Act 2002 (the 2002 Act) gave long leaseholders the right to join together to take over the management of the premises containing their flats. It required an RTM company be formed to exercise the right to serve a Notice of Invitation to Participate on those leaseholders who are not company members and then fourteen days after the last notice is served to give a formal Claim Notice to the landlord. The landlord may then serve a formal counter-notice.

Background information: The Right to Manage

The Right to Manage is one of the easiest ways for flat owners (lessees) to take control of their own building. The Commonhold and Leasehold Reform Act 2002 provides this right for leaseholders of flats to force the transfer of the landlord's management functions to a special company set up by them – the right to manage (RTM) company. This enables leaseholders, who generally hold the majority of value in the property, to get together and take responsibility for the management of their block without incurring the expense of buying the freehold.

The process is relatively simple. The landlord's consent is not required, nor is any order of court needed. There is no need for the leaseholders to prove mismanagement by the landlord. The right is available, whether the landlord's management has been good, bad or indifferent.

More detailed guidance can be found in the LEASE publication on the Right to Manage.

(News story added: 24 March 2010)