Helping customers influence the management of their homes Resident Management Companies, Right to Manage and Managing Agents

16.04.24 03:42 PM By Marketing

Glossary

Resident Management Company (RMC) - An RMC is a formal company usually set up at development stage which performs the landlord responsibilities for the relevant block/estate. These duties (e.g) Cleaning, Landscaping, Lighting, Health and Safety, repairs, litter collection, etc. are often carried out by a Managing Agent (see below) on the RMCs behalf. Residents pay a Service Charge or Estate Charge in return for the services which are stipulated within the lease. The shareholders of an RMC are the individual leaseholders.

Managing Agent -A Managing Agent is appointed by the RMC, RTM or Landlord to carry out the duties and responsibilities stipulated within individual leases. They have no ownership interest in the development and are effectively only temporarily employed in their role. The terms of a Managing Agents engagement is set out in a Management Agreement between themselves and the Landlord.

Right to Manage Company (RTM) - An RTM is a non-profit company created by residents for the purpose of taking over the responsibility for management of a building containing flats. There are qualification criteria in terms of the type of tenures (Shared Owners are qualifying leaseholders) and the type of building itself. However, if the criteria are met then Right to Manage is achieved without having to prove mismanagement or fault on the landlord’s behalf. An RTM can manage the building itself or do so through via a Managing Agent.

It is important to note that RMCs and RTMs are not associated with Heylo Housing in any way. Also, most managing agents on our sites are not appointed by Heylo Housing but by the relevant Landlord, RTM or RMC.

How can residents influence a Residents Management Company (RMC)?

Shares in an RMC are distributed in line with the company’s Articles of Association. This is usually on an equal basis so all leaseholders have similar control of the company. If a resident sells their home, their share passes to the new owners.

Voting rights for an RMC are allocated as per the Articles of Association. Residents are able to use their voting rights to influence key appointments within the RMC (Chair, Secretary, Treasurer, etc) and use their membership to affect the ways their homes are managed.

How can customers create a Right to Manage (RTM) company?

Qualification for RTM

• Right to Manage does not current apply to Houses

• Two-thirds of flats in a building must be owned by long leaseholders

• At least half of all qualifying leaseholders must agree to take part in the formation of a Right to Manage company

• There are qualification criteria around the percentage of the building that is occupied on a commercial basis

• Buildings must be capable of functioning independently and not rely on others for (eg) heating systems

The Procedure

Advice and information on the Right to Manage process is available at:

Right To Manage - HomeOwners Alliance (hoa.org.uk)

And

Right to Manage - The Leasehold Advisory Service (lease-advice.org)

Please note that the Leasehold and Freehold Reform Bill is currently (April 2024) making its way through Parliament. The Bill proposes changes to the RTB criteria and process which are designed to make RTM more achievable for Leaseholders

Management:

• The RTM company does not have to keep on the existing contractors or managing agent.

• The RTM company takes on all management functions within the lease

• The freeholder has to be kept informed on such matters as consents (eg) alterations

• The RTM company has the power to enforce lease obligations but not to use the forfeiture procedure.

• The Freeholder is entitled to apply to join the RTM company after acquisition

• The RTM company must abide by the Articles of Association and relevant company law.

Things to consider before becoming involved in RMC/RTM

• Involvement can require a high level of commitment and responsibility

• Directors of both RTM and RMC should have adequate Directors insurance

• It is important to make sure that the RMC/RTM Directors have a good understanding of both Company Law/Landlord and Tenant Law.

Alternatives

Taking an active part in a Resident Management Company or Right to Manage Company may not be something that suits everyone. If a customer feels that they want to influence how their home is managed there are a number of different options which include :

• Contact heylo (what details?)

•Residents Association - This can be done either formally or informally and can be a great tool in communicating with your Freeholder/Landlord/Managing Agent

• Application to Appoint a Manager – S24 of Landlord and Tenant Act 1987 allows for First Tier Tribunal to appoint a manager if a landlord is proved to breach it’s responsibilities under the terms of the lease