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Right to manage companies

A tribunal has recently decided that a right to manage company (RTM company) was liable for the landlord’s reasonable costs following the RTM company’s withdrawal of its right to manage application.
This decision is good news for landlords as it will prevent an RTM company from pulling out at the last minute leaving the landlord with substantial irrecoverable costs.

The right to manage 

Legislation gives long leaseholders of flats the collective right to manage their building.
The landlord’s consent is not needed and there is no requirement to show that there has been mismanagement by the landlord or its agents.
The right to manage has to be exercised through an RTM company, which must be a private company limited by guarantee.

Recovery of landlord’s costs

An RTM company is liable for the reasonable costs resulting from an RTM company’s claim notice where those costs are incurred by any of the following:

  • A landlord under a lease of the whole or any part of any premises.
  • A party to such a lease otherwise than as landlord or tenant.
  • A manager appointed to act in relation to the premises, or any premises containing or contained in the premises.

An RTM company is liable for reasonable costs that any of the persons listed above incurs as party to any right to manage proceedings only if the appropriate tribunal dismisses the RTM company’s application for a determination that it is entitled to acquire the right to manage.

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