Right to manage is a popular option for leaseholders who want more control over how their block is managed. If you are considering right to manage for your block, you must check that it meets the prescribed criteria, as Brady Solicitors RTM experts explains.
Right to manage is generally used by leaseholders who are unhappy with how their block is being managed.
Importantly however, right to manage (or RTM) is non-fault based. This means that leaseholders don’t have to prove that the managing agent has been negligent or otherwise incompetent. In fact, in the majority of RTM cases handled at Brady Solicitors, the main drivers for RTM are the leaseholders’ desire to reduce costs or improve service standards – and quite often both.
Generally speaking, RTM is a positive step for leaseholders who wish to take control of the management of their block and how their service charge monies are spent.
Does our block qualify for right to manage?
Before incurring the costs of a right to manage application it is essential that you understand the qualification criteria and can clarify whether or not your block will qualify. Brady Solicitors’ RTM experts set out the key criteria below.
Your block must be self-contained
To qualify for RTM, your block must be structurally detached. You need to consider not just theparts above ground but also aspects such as an underground car park or gym facilities that might be shared with other buildings.
Part of a building can be deemed to be self-contained if it has an ‘absolute vertical division’, ie: if from earth to sky, the building is detached from its neighbour.
Certain tests can be applied to help assess if your block is self-contained:
- Could the block be redeveloped independently of the rest of the building?
- Are the services (gas, water, electricity etc.) independently provided?
- Can these services be changed or interrupted without affecting the rest of the building?
Landlords have been able to successfully challenge RTM applications on the basis that too many pipes would need to be rearranged to meet the tests above.
If you are unsure as to whether your block is self-contained, Brady Solicitors recommend seeking expert advice.
Your block must have enough qualifying tenants
To be eligible for right to manage, two or more of the flats must be held by qualifying tenants and the total number of flats held by those tenants must not be less than two thirds of the total number of flats. A qualifying tenant is a leaseholder whose lease was originally granted for a term of more than 21 years.
. In absolute terms, this means that in a block of eight flats, at least six must be held by qualifying tenants. Likewise, in a block of 20 flats, at least 14 must held by qualifying tenants.
The participating tenants must be at least 50% of the total number of flats at the date the notice is served (with a minimum of two participators.)Please note that RTM will not be an option if any of the qualifying tenants have a housing authority landlord.
You block must be no more than 25% commercial
This is a key criteria for RTM and one that isn’t always easy to assess. If the commercial / residential split isn’t clear, you may need to get expert opinion on the internal floor area.
When calculating the commercial percentage, an assessor will include any dividing walls to the commercial unit and also any commercial car parking spaces. Balconies however will not be included.
Whilst the burden of proof rests with the landlord, if he can provide evidence that there is at least 26% commercial tenancy, the RTM will not be possible.
This qualifying criteria relates to smaller properties where the landlord is one of the resident tenants. In this instance your block will not qualify for RTM if:
- The building is not a purpose-built block, and
- The block has four or fewer flats, and
- The landlord (or an adult member of their family) has lived in one of the flats for the last year.
As leaseholders applying for the right to manage, you will be liable for the costs incurred by the landlord as well as your own legal costs.
This makes it crucial to do your ‘due diligence’ to ensure that your block qualifies for RTM before you start to incur any significant costs.