Implications Of Setting Up A Right To Manage Company

You have been disgruntled by the way your landlord maintains your block of flats for a while; however you recently discover that the other tenants sharing the block feel the same. The services provided are second rate and you are all paying far too higher fee.

One of the tenants suggests consulting a specialist solicitor with a view to forming a right to manage company and over the management yourselves.

This sounds like a brilliant idea. However, before you do, taking over the management will impose important responsibilities so get wise to some of these before consulting a lawyer about exercising your right to manage leasehold property.

Some of the issues to think about when considering right to manage (often called RTM) are:

- the leaseholders must manage the building via a right to manage company which means understanding legal procedures for company formation.

- the leaseholders - who will then have the role of officer of the new right to manage company - must wish to be involved for the long haul.

- these legally elected people will include directors, a chairman and company secretary; they will have usual duties expected of company directors, and landlords.

- the right to manage company must be open to and available for critical comment from remaining leaseholders in the same way as the landlord has been.

- regular meetings must be held to keep company communications up to date.

- bookkeeping, accounts, legal requirements and other essential criteria must be checked.

- prompt payment of charges by leaseholders is essential to maintain solvency of the RTM company.

- any problems or conflicts between fellow leaseholders must be handled correctly.

- you will need to be in line with different company, health & safety and housing laws.

- an awareness is built of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). This helps look after employee's rights when a business transfer takes place.

Obviously, you solicitor will explain things properly, help and support you. It's a good idea to search for a specialist RTM lawyer who has plenty of experience of this aspect of Law and can give the right advice for a hassle-free process.

The right to manage is a positive opportunity for tenants (the leaseholders) who actually own most of the value in the building to control their own affairs. They will be directly involved in decision-making about the management and maintenance of their flats. Imagine how good it will feel when your service charges fall and yet you find you have vastly improved service!


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Tim Bishop is senior partner at Bonallack & Bishop, a firm of solicitors experienced in advising on forming a right to manage company and right to manage leasehold property. Tim is responsible for all major strategic decisions, seeing himself as a businessman who owns a law firm. He expanded the firm by 1000% in 13 years.