You may be wondering what the Right to Manage is, or what impact it will have on you. We have set out some information to questions that we are frequently asked about the Right to Manage. If you have a question that is not answered with the below information please feel free to contact us.
The Right to Manage is a statutory right for owners of leasehold flats to manage their block or estate. It allows the Property Owners to appoint a Managing Agent of their choosing or manage the property themselves if they so wish.
Right to Manage is the little brother of Enfranchisement, which is the statutory right of Property Owners to purchase the Freehold of their block. Enfranchisement has been around longer than Right to Manage, and while it would be a better option for Property Owners to purchase the Freehold, it became apparent that this was not an option for all Property Owners. This gave rise to the Right to Manage, which allows Property Owners to have control of the management of their property without having to go to the expense of purchasing the Freehold.
Why is the Right To Manage necessary?
There may be a number of reasons why exercising the Right to Manage is necessary. Usually it is because the property owners are unhappy with the current management arrangements and exercising the Right to Manage provides a means of exercising oversight and control over the current Managing Agent or appoint a Managing Agent of their choosing.
Often Managing Agents are appointed by the developer before a site is complete. The Managing Agent will continue to manage the property even though the developer no longer has any interest in the scheme and may have even sold their interest to an investment fund. In these circumstances, exercising the Right to Manage is usually the most appropriate way for property owners to have an involvement in the management of the property.
It may also be that the property owners would like to manage the property themselves. There does not have to be any dissatisfaction with the current management arrangements for property owners to exercise the Right to Manage.
What's the Process of Acquiring the Right to Manage?
The process for obtaining the Right to Manage is set out in the relevant legislation. There is an overview of the process below and we will undertake all the steps necessary to acquire the Right to Manage where the Property Owners have decided to do so.
The first, and possibly most important part of the Right to Manage is obtaining the agreement of the majority of Property Owners. Once there is an indication that there is sufficient interest a company will be incorporated as a vehicle to acquire the right. All those that agree to acquire the Right to Manage will become members of this company, which is how a say in the management is achieved.
The company is limited by guarantee and therefore there is no financial liability associated with being a member of this company. Property Owners may become Directors of the company which will allow a greater deal of involvement in the management of the property.
The next stage is to serve a formal notice on the Freeholder. The Freeholder has the option to allow the right to be acquired or to deny the right. The ability to deny the right is very limited, and usually the Freeholder will either allow the right or not respond, which would mean the right to acquire is obtained.
A Managing Agent will only be permitted to contest the Right to Manage where they are named in the Lease. Again, their ability to contest the right is very limited.
Once the above steps are complete, the Right to Manage will be acquired and the Right to Manage Company will take over the management from a given date.
How much work will I have to put in?
Very little! Property Owners are only required to agree to acquiring the Right to Manage in order to gain a sufficient majority. Usually there will be a small number of individuals who are driving the process forward. Once the sufficient majority has been acquired we will undertake the necessary formalities at no cost to the Property Owners.
Property Owners can have as little or as much input into the running of the property as they wish. Property Owners are able to become Directors of the company that will be set up to acquire the Right to Manage. This will allow Property Owners to be more involved in the day to day management of the property.