rtm company
📖 What is rtm company? Meaning and definition
An RTM company is established by qualifying tenants of a building to exercise their statutory right to manage the property. This right, governed by the 2002 Act, allows leaseholders to take control of services, repairs, maintenance, and other management functions, without needing to prove fault on the part of the landlord. The process involves a two-stage statutory procedure: first, inviting all qualifying tenants who are not already members to participate, and then serving a claim notice.
For an RTM company to acquire the right to manage, the premises must meet certain criteria. These include consisting of a self-contained building or part of a building, containing two or more flats held by qualifying tenants, and crucially, at least two-thirds of the flats must be held by qualifying tenants. A 'qualifying tenant' is generally a person holding a flat under a long lease, typically exceeding 21 years, and not a business lease.
Once an RTM company successfully acquires the right to manage, it assumes the landlord's management functions. This can include responsibilities such as arranging repairs. In some circumstances, an RTM company may even apply to the First-tier Tribunal to dispense with consultation requirements for urgent repairs, as seen in cases where immediate action is necessary. Landlords sometimes raise objections to RTM applications, often focusing on perceived defects in notices or compliance failures, but tribunals aim to prevent such technicalities from unduly hindering legitimate claims.
📋 Requirements
- The premises must be a self-contained building or part of a building.
- The premises must contain two or more flats held by qualifying tenants.
- At least two-thirds of the flats in the premises must be held by qualifying tenants.
- A qualifying tenant holds a flat under a long lease (exceeding 21 years) that is not a business lease.
- Notices must be given in the name of the RTM company, potentially by its lawfully appointed agent.
📝 Procedure
- Serve a notice inviting participation on all qualifying tenants who are not members of the RTM company or have not agreed to become members.
- Serve a claim notice to acquire the right to manage.
- Address any objections raised by the landlord, which may concern issues like who qualifies as a tenant or the validity of notices.
- If necessary, pursue the claim through the First-tier Tribunal, which will determine if the RTM company has met the statutory requirements.
💡 Examples
- An RTM company successfully acquired the right to manage a block of flats despite the landlord's objections regarding who qualified as a tenant, following a precedent set by the Upper Tribunal.
- A landlord tried to argue that notices were not properly given by an RTM company, but the Tribunal found no fault as the notices were clearly issued in the company's name by its agent.
- An RTM company applied to the First-tier Tribunal to bypass consultation requirements for urgent repairs at a property, and the application was allowed.
- Leaseholders formed an RTM company to take control of their building's management, fulfilling the requirement that two-thirds of the flats were held by qualifying tenants with long leases.
📚 Legal basis
- Commonhold and Leasehold Reform Act 2002
❓ Frequently asked questions
What is the main purpose of an RTM company?
The main purpose of an RTM company is to allow leaseholders to take over the management of their building from the landlord, including responsibilities for services, repairs, and maintenance, without needing to prove any fault by the landlord.
Who can be a 'qualifying tenant' for an RTM application?
A 'qualifying tenant' is generally a person who holds a flat under a long lease, which is typically granted for a term exceeding 21 years. However, a long lease that is a business lease does not qualify.
Can a landlord object to an RTM application?
Yes, landlords frequently object to RTM applications, often citing minor defects in notices or failures of strict compliance with the statutory procedure. However, tribunals aim to prevent such objections from unfairly blocking legitimate claims.
Do all tenants in a building have to join the RTM company?
No, not all tenants have to join. The statutory procedure requires an invitation to participate to be served on all qualifying tenants who are not already members, but only two-thirds of the flats need to be held by qualifying tenants for the RTM to be acquired.
Can an RTM company make decisions about urgent repairs without consulting tenants?
In specific circumstances, an RTM company can apply to the First-tier Tribunal to dispense with the usual consultation requirements for urgent repairs, particularly when immediate action is necessary. The Tribunal will then decide whether to allow this.
What happens if there are issues with the notices given by an RTM company?
Small or apparently insignificant defects in notices, or failures of strict compliance, are often relied upon by landlords to challenge an RTM application. However, if the notices clearly state they are from the RTM company, even if issued by an agent, they may still be deemed valid by the Tribunal.