Right to Manage & Enfranchisement Explained Simply

If you’re a leaseholder or tenant living in a leasehold property, you might have heard the terms Right to Manage and Enfranchisement but wondered what they really mean. These legal rights can empower leaseholders by giving them more control over their homes and how they are managed. In this article, we break down the concepts of Right to Manage & Enfranchisement simply, helping you understand the process, benefits, and what happens afterward.

What is the Right to Manage?

The Right to Manage (RTM) is a legal right under the Commonhold and Leasehold Reform Act 2002 that allows leaseholders of flats or apartments to take over the management of their building without needing to prove mismanagement or wrongdoing by the landlord.

Who Can Exercise the Right to Manage?

To exercise the Right to Manage, a group of qualifying leaseholders (known as the RTM company) must meet certain criteria:

• The building must contain at least two flats.

• At least 50% of the flats must be owned by leaseholders who want to exercise the RTM.

• The leaseholders must have leases granted for at least 21 years.

• The building must not be a house or a commercial property.

Once the RTM company is set up and serves the correct notices to the landlord, management responsibility transfers to the leaseholders.

What is Enfranchisement?

Enfranchisement is a related but distinct right that allows leaseholders to collectively buy the freehold of their building. This means that instead of leasing from a landlord, the leaseholders become the freeholders, giving them ultimate ownership and control.

Types of Enfranchisement

There are two main types:

• Collective Enfranchisement: Leaseholders band together to buy the freehold of their building.

• Lease Extension: Individual leaseholders can extend their lease to gain longer terms and more security.

Enfranchisement is governed by the Leasehold Reform, Housing and Urban Development Act 1993 and is a more complex process than RTM, often involving valuation and negotiation on price.

Right to Manage & Enfranchisement: The Process Explained

Step 1: Forming a Group

For both RTM and Enfranchisement, leaseholders must form a company or a group to act on their behalf. This group will handle communications, serve notices, and manage negotiations.

Step 2: Serving the Notice

• For Right to Manage, the RTM company serves a formal notice to the landlord expressing their intention to take over management.

• For Enfranchisement, the leaseholders serve a collective enfranchisement notice that includes their offer to purchase the freehold.

Step 3: Response from the Landlord

After receiving the notice:

• The landlord may accept or contest the notice.

• For RTM, disputes can be resolved through a tribunal.

• For Enfranchisement, if there is disagreement on price or eligibility, it may go to a tribunal or court.

Step 4: Transfer of Management or Ownership

• In RTM, once the notice is accepted or tribunal makes an order, management responsibilities transfer to the RTM company.

• In Enfranchisement, after the purchase price is agreed and paid, the freehold title transfers to the leaseholders’ company.

Benefits of Exercising the Right to Manage & Enfranchisement

More Control Over Your Home

The biggest advantage of both rights is gaining more control over how your building is managed, including:

• Hiring and supervising managing agents.

• Setting service charges and budgets.

• Making decisions about repairs and improvements.

Financial Transparency

Leaseholders can expect clearer, more transparent accounts and service charge costs under RTM or after enfranchisement, avoiding unfair charges.

Security and Stability

Owning the freehold through enfranchisement gives long-term security and can increase property value. RTM also ensures professional management free from landlord neglect.

Resolving Management Issues

If you’ve faced poor management, unresponsiveness, or excessive charges, the Right to Manage is a way to bypass problematic landlords without litigation.

Common Questions About Right to Manage & Enfranchisement

How Long Does the Process Take?

The Right to Manage process usually takes between 6 to 12 months from serving notice to transfer of management. Enfranchisement can take longer, often 12 to 18 months, due to negotiations and valuation complexities.

What Costs Are Involved?

• Legal fees for setting up the RTM company or enfranchisement group.

• Valuation fees for enfranchisement price negotiations.

• Management costs after the RTM company takes over.

• Possible tribunal or court fees if disputes arise.

Can All Leaseholders Participate?

To qualify for RTM, a minimum number of leaseholders must agree and participate. For enfranchisement, all participating leaseholders must meet eligibility criteria, such as lease length and property type.

What Happens After Management Is Transferred?

The RTM company becomes responsible for all aspects of building management, including maintenance, insurance, and service charges. It can appoint a managing agent or manage the building directly.

Post-Treatment Care: Managing Your Building Effectively

Taking on the Right to Manage or buying the freehold is just the beginning. Successful post-transfer management requires:

Clear Communication

Maintain open lines of communication with all leaseholders. Regular meetings and transparent reports help build trust and ensure smooth running.

Professional Management

Consider hiring professional managing agents or property managers to handle day-to-day operations unless you have the skills and time to self-manage.

Budgeting and Planning

Create realistic budgets for service charges and plan for long-term maintenance and repairs. Setting up a reserve fund is advisable.

Legal Compliance

Stay updated on landlord and tenant law, health and safety regulations, and property maintenance standards to avoid legal pitfalls.

Final Thoughts

Understanding the Right to Manage & Enfranchisement empowers leaseholders to take control of their homes and improve their living conditions. While the processes require effort, time, and sometimes legal advice, the benefits of better management, financial transparency, and ownership security are invaluable.

If you are considering exercising either right, start by consulting with a specialist solicitor or leasehold advisor who can guide you through your specific situation.