Taking Control of Building Management For Flat Owners

Insights - 23/11/2020

It is increasingly common for flat owners to want to take control of the management of their building, usually following differences with the freeholder or their managing agent. This is often achieved by the flat owners exercising the right to “collective enfranchisement”, which allows the tenant to force the landlord to sell the freehold to them at a price calculated according to a statutory formula.

Right to Manage

But this is not the only option available – there is also the Right to Manage (“RTM”). This is the right for flat owners to take over the management of their block from their landlord (and their agents) without having to incur the cost of buying the freehold. It will also enable the flat owners or, more usually, a managing agent appointed by the flat owners, to deal with the maintenance of the block, administer and collect the service charges and (in consultation with the landlord) deal with any requests from flat owners for alterations to their flat.

Advantages and Disadvantages of Right to Manage

The advantage of RTM over buying the freehold is that the costs are significantly reduced because the flat owners do not have to pay the purchase price. The process is also much simpler. However, there are some disadvantages.

The RTM does not include the right to extend the individual leases of flats, and it does not allow the flat owners to make changes to the freehold, for example by selling off part of the land, or by granting rights over it such as a right of way. In an RTM application, those rights remain with the landlord.

Key considerations of RTM

The key consideration is what the flat owners are looking for. If it is to take control of the management and maintenance of the block then exercising the RTM may be the best option. If the flat owners want to be able to exercise the rights of a freeholder, for example by extending their leases, then buying the freehold using the collective enfranchisement process may be more appropriate.

Our specialist leasehold enfranchisement team are experienced in helping clients understand the options and guiding them through each process. Contact us today to discuss Collective enfranchisement and the right to manage today.

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Disclaimer:

Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.