About the right to manage

The right to manage is a right for owners of leasehold flats to work together to take over the management of their building from the landlord (freeholder). It’s useful if you want to take responsibility for how your building is managed and maintained.

You do not need the landlord’s consent, or to go to court. You do not need to prove that there have been any problems with management – you can still take on the right to manage if the landlord has been managing the building well.

The building must meet certain conditions, and the leaseholders for at least half the flats in the building must take part.

You’ll need to set up a right to manage company, invite all the leaseholders to become members, and follow a set process. Some of the leaseholders will need to become directors and run the company.

It’s the right to manage company that’s responsible for managing the building, not individual leaseholders. Some of the leaseholders may change over time if they sell their flats, but the company will continue to manage the building.

The building will still be owned by the landlord, and they have the right to become a member of the right to manage company once management has been transferred.

If you buy a leasehold flat in a building that already has a right to manage company, you’re entitled to become a member of the company and have a say about how the building is run.

The right to manage can be a good option if:

• you’re unhappy with how your building is being run
• you want to have more control and be able to make decisions about your building
• you think costs are too high and could be reduced by taking over the management
• other leaseholders in the building are willing to be involved and work together

However, it’s a big responsibility to take on, and there are things you need to consider.

Setting it up

The process is fairly simple, but it will take several months. It’s not a quick solution if there are urgent problems.

Costs

Unlike options such as buying the freehold, the right to manage is not expensive to set up for individual leaseholders.

The right to manage company will need to cover its own legal costs, but it will not usually be liable for the landlord’s costs.

You might be able to reduce service charge bills once you take over management. However, you should not try to save money by cutting down on services or maintenance if this affects the condition of the building. The right to manage company must act in the best interests of the property, even if this might sometimes mean an increase in costs.

Responsibilities

You’ll need to find people who are willing to be directors of the right to manage company, and who have the right skills or are willing to learn. The role can be time consuming, and directors are not usually paid for their time.

Directors will need to:

• learn about company procedures, or get professional advice
• comply with company law, and housing and health and safety law
• handle budgets and accounts
• deal with financial problems, such as leaseholders who do not pay service charges on time
• maintain the building to a good standard
• meet the landlord’s responsibilities as set out in the lease
• deal with disagreements between leaseholders, or with other directors, who may have different views

The right to manage company does not have to do the day-to-day management itself. You can choose to use a managing agent.

A building is eligible for the right to manage if:

• the landlord is not a local authority
• the building contains at least 2 flats
• at least two-thirds of the flats are owned by “qualifying tenants” (this means long leaseholders – the leases must have been more than 21 years when they were first granted)
• leaseholders for at least half the flats in the building agree to take part and become members of the right to manage company, or if there are only 2 flats then both leaseholders must take part
• the building is at least 50% residential – so if it contains commercial premises such as a shop or office, these premises must not take up more than 50% of the total floor space (not including common areas such as shared entrances and staircases)

The leaseholders do not need to live in the flats – they’re still eligible if they rent their flats out. Shared ownership leaseholders are also eligible.

The building must be a single self-contained building, or a self-contained part of a building that is structurally detached. If there are separate (structurally detached) blocks in an estate, each block would need to take on the right to manage separately. It can sometimes be difficult to decide whether a building is “structurally detached”, so you may need to get professional advice on this from a surveyor.

Exemption for resident landlords

There is an exemption in some cases where the landlord lives in the building, called the resident landlord exemption. This means the building will not be eligible for the right to manage if all of these apply:

• it's not a purpose-built block of flats (for example if it’s a converted house)
• it has 4 flats or less
• one of the flats is occupied by the landlord (freeholder) or an adult member of their family as their only or principal home, and they’ve lived there for at least the last 12 months

The main steps for taking on the right to manage are:

1. Set up and register a right to manage company (any number of leaseholders can do this, but it’s a good idea to consider whether you’ll have enough qualifying leaseholders willing to join later).
2. Invite all the leaseholders to become members of the right to manage company, by sending a notice inviting participation. Leaseholders for at least half the flats will need to join.
3. Tell the landlord that you’re claiming the right to manage, by sending a notice of claim. You must send it at least 14 days after the notice inviting participation.
4. Give the landlord at least a month to send a counter-notice.
5. Arrange contracts for any services needed to manage the building.
6. Take over management of the building on the date set out in the notice of claim. This must be at least 3 months after the landlord’s deadline for sending a counter-notice.
7. The landlord transfers any money from unspent service charges or a reserve fund (sinking fund) to the right to manage company.

If the landlord disputes the claim, you can apply to a tribunal for a decision.

It’s best to get professional advice from a solicitor at an early stage if you’re considering the right to manage.

For more information on how to get started, see our guides:

• Setting up the right to manage – for a step-by-step guide to the process
• Running a right to manage company – for information on how the company should be run and your responsibilities if you become a director

The right to manage may not be the best option in all cases. You can find out about other options if you’re unhappy with how your building is managed.