On 30 September 2003 the right to manage provisions contained in the Commonhold and Leasehold Reform Act 2002 (“the Act”) came into force.
The above-mentioned right to manage provisions created a new right to enable leaseholders of flats to take over the management of their building without the need to prove shortcomings on the part of the landlord and without the need to pay compensation for the exercise of the right. The landlord is, however, entitled to reimbursement of his reasonable costs in connection with the right to manage.
The right to manage provisions brought into force by the Act must be exercised through a Right to Manage (RTM) Company. The Act defines an RTM company as a private company limited by guarantee whose Articles of Association states that its object, or one of its objects, is the acquisition and exercise of the right to manage the premises, which must be specified in the Articles of Association.
The name of the Company must end with “RTM Company Limited”. The Articles specify that there must be at least two directors and at least two members at all times. A member must be a “qualifying tenant” of a flat contained in the premises. A person is a qualifying tenant if that person is a tenant of a flat under a “long lease”, i.e. one that is granted for more than 21 years. From the date on which the RTM company acquires the right to manage, landlords under leases of the whole or any part of the premises are entitled to become members of the RTM company.