In order to be eligible for the Right to Manage both the building and the applicant leaseholders must meet a statutory qualification. RTM only applies to leasehold owners of flats and not to leasehold houses or bungalows. A qualifying tenant is a leaseholder whose lease was originally granted for a period exceeding 21 years. The building will qualify if at least two thirds of the flats are leased to qualifying tenants and the premises consist of a structurally detached building or part of a building that can be served independently. A building will not qualify if more than 25% of the floor area is non-residential, if there are multiple landlords or it is a block of four or less flats with one flat used by the landlord for principle residence. Properties owned by the local authority are excluded.
The right to manage must be exercised by an RTM company incorporated with prescribed articles. All leaseholders are entitled to become members with individual liability limited to £1. Since November 2009 RTM companies only require a single director but typically comprise a board of three or more members. Although legislation requires 50% of leaseholders to become company members before an RTM Claim Notice can be issued it is generally advisable to aim for at least two thirds to join the company, which avoids any criticism that the procedure is undemocratic.
The exercising of Right to Manage is started by the leaseholders’ RTM Company serving its Claim Notice on the landlord. Thereafter it follows a prescribed route comprising further notices and counter notices. RTM is usually determined within two months with the right to take over management following three months later. For a summary of RTM procedure see our web-page entitled ‘RTM Timeline’.