Right to Manage

Have you heard about Right to Manage (RTM)? If you live in a block of flats it’s something that you should be aware of because it can give you more power over your home and block and could potentially save you a lot of money. RTM was introduced by Parliament under the Commonhold and Leasehold Reform Act 2002, to allow leaseholders who were unhappy with their freeholder or their property manager to collectively take control of their building from the freeholder and appoint their own building manager.

What is Right to Manage?
Right to Manage is a statutory right enabling leaseholders to take control of their building and manage it themselves, or more likely appoint their own managing agent, rather than being managed by a freeholder appointed agent. This means that leaseholders can replace their building manager and banish hidden costs like commissions and have greater control over the running and maintenance of the building. There are certain rules around which buildings are eligible for Right to Manage and these can be quite complex, but the basic requirement is for a building that doesn't share any services with another building, has less than 25 % commercial space, has two or more leasehold flats, 75% of the flats are on long leases, and 50% of the leaseholders want to go ahead. You can check whether your building qualifies with our free pre-qualification screening at miblox.co.uk It's worth checking the Leasehold Advisory Service website for the full requirements.

How does Right to Manage benefit leaseholders?
Many leaseholders don’t own their building or control their service charge or building manager. They are largely at the mercy of their freeholder, who in a lot of cases, is a corporate entity set up to profit from lease extensions and commissions. The leaseholder is not the priority of the building management here. Right to Manage gives leaseholders a voice and empowers them with control over their property. This means they can replace their freeholder-appointed managing agent, control their service charge, and banish hidden insurance commissions and other "costs" that were previously paid for by leaseholders out of their own pockets. They also gain control of the maintenance program for their building.

Why is Right to Manage not more widely known?
While there is a webpage on Gov.uk with the relevant information, the government doesn't promote Right to Manage very heavily. An industry has grown up built around finding ways to generate money for freeholders and their agents at the expense of leaseholders. City funds have been created with the purpose of buying up freeholds and generating money from them. A recent FCA report highlighted that freeholders are often paid commissions by insurance brokers, sometimes up to 60%, passing that cost onto leaseholders who have no control over what they're paying. Some freeholders have been known to leverage costs onto the leaseholder as small as answering a letter. This leads to a situation where there is no commercial benefit within the established industry to highlight this statutory right.

How can leaseholders go about taking advantage of Right to Manage?
The standard way is to find a property solicitor, but it is not a popular activity for them due to the length of time it takes, the amount of paperwork it generates and the need to chase numerous leaseholders. Many large management companies use it to get new buildings onto their portfolio, but there is a real chance of the leaseholders jumping out of the frying pan and into the fire if they don't get their choice of partner correct. Many of these agents will do the Right to Manage for free with the proviso that the building is managed by them for the next couple of years at least. You may also want to find out more about how it works and see if it's right for your building. The Leasehold Advisory Service is a government run service which is invaluable for information regarding this. Check there before making any decisions. Also check out the FAQ on miblox.co.uk for more details.

What is mi-blox
That's why we created mi-blox, a platform that automates and simplifies the RTM process enabling leaseholders to take control from the start. It will tell the leaseholder if their building is eligible and guide them step by step through the process. All the legal documentation is generated directly in the platform using the information provided by the leaseholders. All they have to do is sign and post it. And we're working on enabling the leaseholders to communicate with each other within the platform to turn their building into a community. We have big plans. Join us!