Business Services : Residential Leasehold : Received an RTM Claim Notice?

RTM Claim Notice

Received an RTM Claim Notice?

If you receive a Right To Manage (RTM) notification, it’s important to act quickly. Here’s what the process involves and how you can ensure that your best interests as a landlord are served.

What Is An RTM Notification?

If you receive an RTM notification, this means that some (or all) or your leasehold property owners wish to take over the management of a property you own. You’ll still own the building, but the leaseholders will take over the responsibility for things like:

  • collecting and managing the service charge
  • upkeep of communal areas (such as communal hallways and stairs)
  • upkeep of the structure of the building (such as the roof)
  • dealing with complaints about the building from other leaseholders.

Why Are The Leaseholders Of My Building Sending An RTM Notification To Me?

Qualifying leaseholders don’t need to provide a reason when they trigger the Right to Manage. It doesn’t mean that your own management of the building was poor, and the tenants will not need to prove anything to that effect.

As this is a ‘right’ to manage, the tenants in your building don’t need your permission to press on. However, there are some qualifying factors which are required in order for the notice to be valid, including the set-up of an RTM company.

What Is An RTM Company?

To trigger the right to manage, leaseholders must set up an RTM company. This company may manage the building directly or pay a managing agent to take care of it.

It’s not just leaseholders who can be a member of the RTM company – as the landlord, you can also be a member and vote on building management decisions. You’ll get at least one vote, but you could have more, depending on how many flats you own in the building.

When the RTM company begin to transfer the management responsibilities, they must pay any costs incurred by the process – even if it fails and they cease the RTM.

Who Qualifies For Right To Manage?

In order for leaseholders to trigger the Right to Manage process, they must adhere to the following:

  • The building must be made up of flats (houses don’t qualify)
  • At least two-thirds of the flats in the building must be leasehold - with leases longer than 21 years when they were granted
  • At least 75% of the building must be residential – and if there’s a commercial area in the building, it can’t take up more than 25% of the total floor area
  • You must live somewhere else if there are less than 4 flats in the block - unless the block was purpose-built as flats, rather than converted from another type of building
  • Any number of owners can set up an RTM company - but at least half of the flats in the building must be members of the company before it qualifies to take over management.

When And How Will I Receive An RTM Notice?

In the majority of cases, leaseholders will contact you once they’ve set up an RTM company. You may also receive a ‘right to information’ notice from the company, so the validity of the Right to Manage can be proven.

When you receive a ‘notice of claim’, this will explain that the RTM company plans to take over management of your property.

Can I Dispute The RTM Notice?

In the ‘notice of claim’, you will be given a response date, as well as the date the RTM company plan to start managing the property.

In your response, you can choose to either accept our dispute the claim. If you wish to raise a dispute, there will be deadline which is detailed in the notice. It will be at least one month from when the notice was raised.

Should you choose to raise a counter-notice and dispute the claim, you need to provide reasons to explain why the company isn’t entitled to manage the building.

This could be because:

  • The building doesn’t qualify
  • The RTM company doesn’t comply with the legal requirements
  • The RTM company members don’t represent half the flats in the building.

These are the only reasons you can use to dispute the claim.

What Is A First-Tier Tribunal?

If the RTM company think your reasons to dispute the claim are incorrect, they must apply to a First-Tier Tribunal (FTT) within two months of the date of your counter-notice. The LVT will make the final decision over whether the RTM company can take over management of the property.

How Do I Transfer Management Of The Building?

If you accept the RTM notice (or the LVT decide in their favour), the management of the building will transfer to the RTM company. The date of this transfer is known as the ‘date of acquisition’.

If you accepted the original claim, the date will be provided on that notice. If you disputed the claim and lost, the date will be 3 months after the final decision of the LVT. If you raised a dispute but came to an agreement with the RTM company, the date of acquisition will be 3 months after that agreement.

Any money that you have from service charges must also be transferred on the acquisition date, or as soon after as reasonably possible.

What About Ongoing Management Of A Building I Own?

The RTM company must let you know at least 30 days before approving:

  • Assignment (selling or transferring the flat into someone else’s name)
  • A sublet
  • A charge to leaseholders
  • Any action where the lease says your consent is required
  • Any changes to the structure of the building
  • Any changes to the use of the building

For other approvals, they must tell you at least 14 days in advance.

Have you received an RTM claim notice? Get advice from the expert residential leasehold lawyers at Coles Miller. Simply complete the enquiry form below…

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