The 2002 Commonhold and Leasehold
Reform Act (applicable in England and Wales) legislation provides an
opportunity for flat owners, to run their own affairs and to make
their own decisions about the management and upkeep of their flats,
including the insurance, repairs and service charges by means of The
Right To Manage Process (RTM).
These are frequently asked questions
about setting up and running a Right To Manage company:
How Long Does The Right To Manage Process Take?
The timescales are largely determined
by the 2002 legislation. You need to allow approximately five months.
You can take over management at this time, but if there are any
disputes regarding transfer of existing funds, allow some extra time
Do We Have To Pay The Freeholder’s Costs Relating To The Right To
You are responsible for the
freeholder’s “reasonable costs” relating to the application. Often
these costs are small and not requested, but some freeholders use
expensive solicitors to verify the validity of your RTM claim. In this
case, expect to pay several hundred pounds. You can dispute the
‘reasonableness’ of any charges at a Leasehold Valuation Tribunal (LVT).
What Exactly Is A Right To Manage Company?
It is a company formed to take over
management through the Right To Manage process (RTM), as defined by
the 2002 Commonhold and Leasehold Reform Act, has a number of
differences to a normal Limited Company. Firstly it is limited by
guarantee, not by shares. The owners of the company are members rather
than shareholders, and their liability is limited to £1. The Right
To Manage Company is still a limited company registered at
Companies House with normal company reporting requirements, although
the scope of its actions are limited. The memorandum of association is
very specific and defined exactly by the 2002 Act.
Right To Manage Company – How many Directors Are Needed?
Companies House has recently changed
the requirements for limited companies, so that they can now be
operated with a single director and secretary. However the RTM
memorandum of association does require a minimum of two unless
determined by an ordinary resolution.
Right To Manage Company – How Do You Sell Your Flat?
What happens when somebody sells their
flat and a new buyer takes over? A Right To Manage company maintains a
Member Register (at the registered office), a membership transfer is
simply a case of replacing one owner’s name with the new owner.
Right To Manage – What Rights Does The Freeholder Have?
Does the freeholder have a right to
become a member of our RTM company? After you complete the RTM
takeover, the freeholder has a right to become a member of the RTM
company. Most will use this right, not because they want to be
involved in the day-to-day running of the company, but because they
have an ownership interest in the building. In addition you will
probably have your company meetings in your own building, which would
usually be inconvenient for the freeholder to attend. The freeholder
is typically allocated one vote if he/she does not own any flats in
the building, or one vote per flat owned. The situation is more
complicated if there are any intermediate landlords, but you as owners
will still be able to outvote any freeholder representation.
Right To Manage Company – What Are The Ongoing Obligations?
In exchange for your limited
liability (£1), the law requires limited companies to make certain
information available to the public at Companies House. This includes
an annual report and accounts, an annual return, and other
notifications (such as change of directorship, change of registered
office). These must be filed at Companies House.
Call us today on
020 8629 1066 or
click here for no-obligation advice on how to increase the value of your flat.
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