A study of leasehold right to manage companies reveals that there have been only 4,365 right to manage companies formed since 2003.
Paul Walentowicz, senior lecturer in housing at the Anglia Ruskin University in Chelmsford, used a freedom of information request to obtain from Companies House the number of companies with ‘right to manage’ or RTM in their title.
“I think it is a pretty accurate indicator because right to manage companies are encouraged to use the term in the name of their new company,” says Walentowicz.
ARMA points out that the regulations insist ‘right to manage’ or RTM are used, and believes the figure to be an accurate representation of RTM companies in England and Wales.
The figures unearth by Walentowicz are below.
Number of Companies Incorporated in England and Wales with ‘ RTM ‘ or ‘Right to Manage’ in their Company Name:
- 2003 89
- 2004 396
- 2005 289
- 2006 324
- 2007 312
- 2008 428
- 2009 603
- 2010 646
- 2011 725
- 2012 553
- Total 4,365
Source: Companies House, December 2012
It is acknowledged that the legislation was badly drafted for multi-block estates at least. There are barristers, too, who will exploit any legal loophole for a fee from the landlord to prevent RTM.
I have a flat in such a multi-block estate, and am aware that there was to be an Upper Tribunal hearing on 17 May that would have cleared up the outstanding bits of badly drafted legislation. Now this may not go ahead because of the potential for hefty landlord’s costs to be picked up by the RTM company.
LVT was supposed to be an easy process accessible to the layman. That is not so, in my opinion, because of top barristers who will try to force any applicant into appointing their own barrister and ramp up the costs.
Likewise RTM has seen a band of barristers who will try to kill RTM on a technicality on behalf of landlords and managing agents.
There should be no need to set up a Right to Manage company if the more usual mechanism of a flat/resident management company with lessee directors actually worked. Under the terms of the lease, the FMC/RMC has delegated powers to manage on behalf of the landlord in accordance with the terms of the lease and legislation. The weakness here is that the lessee directors are amateurs when it comes to leasehold matters and depend heavily on their appointed managing agent to guide them. Unbridled, managing agents can be relied upon to milk the service charge funds.
In reality though this is generally misunderstod, RTMs only have a role where there is no provision under the terms of the lease for lessees to manage their affairs through the FMC/RMC. Here the landlord manages the property in person or through an agent appointed by the landlord.
Whatever the mechanism for lessees to operate management control, whether it be RMC/RMC or RTM – when the lessee directors are unpaid/voluntary/amateur and/or too busy to bother – then landlords and managing agents will exploit that situation to their advantage. It’s what happens.
In retirement leasehold these RMCs do not exist. The retirement developers have been too eager to keep revenue streams through management long after sale. It would be a godsend if these RMCs did exist – however incompetent some of the directors might be.
My experience is that landlords and their managing agents are expert in exploiting the marketplace they operate in. Part of this exploitation is to take charge of, manipulate and control any lessee-directors with whom they are obliged to do business as a result of the relationship whether it be RTM or RMC/FMC. Exploitation isn’t difficult when the lessee directors are amateur and generally too busy to take on more than a rubber-stamping role.
In the retirement sector, perhaps lessee-directors have more time to exercise due diligence. I wonder how this group of leaseholders is excluded from RTM?
From Paul Walentowicz
I should have made it clear that the 2012 figure is part year only. Companies House tell me that is takes time for the ‘paperwork’ to appear in its statistics. Therefore, there is not necessarily a decline in the registration of RTM companies.
According to the RTM Companies (Model Articles) (England) Regulations 2009 (and its 2003 predecessor) the words ‘Right to Manage’ should appear after the company’s name. So the figures should be a full (or almost full) reflection of the number of RTM companies registered in england since the legislation came into force.
Can I use this email to ‘blow my own trumpet’? I’m the author of Shelter’s ‘Flat Owner’s Guide’ published in 2007. Copies are still available from online sources. Although it is up-to-date as regards to the law, there may be a need for a revised edition to take account of, for example, the practical experience of the legislative changes introduced under the 2002 Act. Any advice received from LKP supporters would be very welcome.
You can email me at email@example.com