Exercising the Right to Manage is becoming an increasingly popular choice for lessees of blocks of flats who do not have the capital to invest in purchasing the freehold of their block but who are no longer happy with the way their freeholder or freeholder’s appointed managing agent is running the building.

Right to Manage is a statutory process that requires a significant number of lessees to participate (the total number of participants must be equal to or exceed half the number of flats in the building) and there is a two stage Notice procedure to be followed, but so long as lessees have sufficient commitment to see the process through, it is a cheaper alternative to Collective Enfranchisement and allows flat owners to control and take responsibility for the management of their own block.

Lessees will need to set up a Right to Manage Company (usually a bespoke shelf company) and serve a Notice inviting all lessees to join that Company.  Once sufficient numbers have given positive response, a second Notice is served on the freeholder claiming the right.  There are only limited circumstances in which a freeholder can say no and after the statutory period of two months has ended he or she must hand over responsibility for managing the building and all service charge funds.  For larger blocks, there may be a significant number of service contracts already in place including for example, managing agents, lift and gardening and a landlord is obliged to supply all relevant management information prior to handing over the management to the tenants.

Lessees have the option of self managing their block if they wish, but most prefer to appoint a managing agent conversant with practice, law and regulations for holding and spending of service charge, making rent demands, and all the many other requirements of modern day management.

Right to Manage does not mean that the freeholder is completely disenfranchised from the management position going forward.  He or she has the right to be a member of the Right to Manage Company and must be consulted about any applications for Licence for Alterations or subletting.  Right to Manage Companies owe a direct duty to the landlord as well as their tenant members to comply with all of the management duties they have taken on, and the landlord has rights against the Company if they fail in that duty.  The landlord alone retains responsibility for any forfeiture action for non-payment of rent and compliance with all landlord covenants contained within the leases. 

Further information is contained within Seddons Enfranchisement leaflet (copies can be obtained from janec@seddons.co.uk) otherwise please contact a member of the Enfranchisement Team if you wish to discuss the procedure.