Brady Solicitors’ Right to Manage solicitors outline some key tips to help you see RTM as an opportunity to grow your property management portfolio.
For managing agents able to demonstrate excellent block management and a focus on leaseholder relations, Right to Manage (RTM) can form a key plank of their growth strategy, as underlined in This Industry Means Business, our recent independent survey of the property management industry, where a powerful 72 percent of the 101 interviewees told our researchers that they view RTM as an opportunity not a threat.
Leaseholders don’t have to prove poor service by the managing agent before exercising their Right to Manage. That aside, our experience shows that it tends to be leaseholders who are unhappy with how their block is being managed that seek to set up a Right to Manage company, appointing new managing agents and contractors where necessary.
Before you start canvassing unhappy leaseholders, make sure that the block will qualify for RTM, particularly if it is a mixture of residential and commercial units. Are the leases for at least 21 years? Is at least 75% of the block residential? Check too that no tenant has a local housing association landlord.
Be organised, be patient
RTM is a highly regulated and procedural process that rewards excellent planning, documentation and leaseholder communications. Map out what’s required and follow it closely. Equally, the acquisition of the right to manage can take some time – up to six months in many cases.
To begin the work to set up an RTM company you first need the support of at least 50 percent of the leaseholders. Ideally, you will also have identified one (or preferably two) people that will be willing to be directors of the new RTM company. Educate these new directors as to their responsibilities and be available when they need advice and support – both before and after set-up.
Be cost conscious
Make sure your legal adviser works on a fixed fee basis and with no hidden costs! The costs of acquiring the Right to Manage and forming the RTM company cannot be recovered through the service charges and you must reimburse any costs incurred by the landlord, making it important to keep costs transparent and reasonable. (Once the RTM is in place however, the running costs can be recoverable through the service charge.)
Managing agents appointed by newly formed RTM companies are usually faced with picking up the pieces from the previous incumbents as well as wary or disgruntled leaseholders. Ensure your legal team can help you to quickly secure the necessary documentation from the previous agents as well as making a swift start on collecting any outstanding monies so that you can deliver the excellent service you promised at the beauty parade!
Although the take up of the RTM option has perhaps not been as quick as some may have expected, those managing agents that can focus on developing strong leaseholder relationships and excellent block management will be the ones to gain when leaseholders do decide to take matters into their own hands.
From securing the necessary leaseholder support for the RTM, through to setting up the company, educating directors on their responsibilities and helping you to pick up the pieces from leaseholder disputes with the previous managing agent, Brady Solicitors is your partner for a successful Right to Manage strategy.
Email us or call 0115 985 3450 to find out more.
PS: And for those on the other side of the fence..
If you are worried that YOUR leaseholders may seek to exercise their RTM rights, talk to us about how we can help. From a focus on boosting the block management by reducing service charge debts through to a lease review service, we can help you to deliver better block management through happier leaseholder relations.