Over the past ten years, Right to Manage (RTM) companies in the UK have experienced significant growth, driven by an increasing demand for leasehold property owners to take control over the management of their buildings. This trend has been fueled by dissatisfaction with managing agents, escalating service charges, and a legislative framework that has made it progressively easier for leaseholders to exercise their RTM rights.
Understanding Right to Manage
Right to Manage (RTM) is a legal provision under the Commonhold and Leasehold Reform Act 2002 that allows leaseholders of a building to collectively take over its management without the need to prove negligence or misconduct on the part of the existing management company. By forming an RTM company, leaseholders gain the ability to appoint managing agents of their choice, oversee service charges, and ensure that maintenance and repairs are carried out efficiently.
Factors Driving Growth
1. Dissatisfaction with Management Companies
One of the primary drivers behind the growth of RTM companies is widespread dissatisfaction with freeholders and property management companies. Many leaseholders have reported excessive service charges, lack of transparency, and poor maintenance services, prompting them to seek alternative management structures.
2. Legislative Changes and Government Support
Over the last decade, the UK government has increasingly supported leasehold reform. While major legislative changes are still in progress, several reforms have been proposed to make it easier for leaseholders to gain control. The Law Commission has made recommendations to simplify the RTM process, including reducing qualification criteria and making applications more accessible.
3. Increased Awareness Among Leaseholders
Another key factor contributing to the rise in RTM companies is growing awareness among leaseholders about their rights. Various consumer advocacy groups, legal professionals, and online forums have played a pivotal role in educating leaseholders on the benefits of forming RTM companies.
4. Financial and Operational Control
Leaseholders have realized that forming an RTM company can lead to significant cost savings. By directly managing service contracts, insurance, and maintenance, they can eliminate unnecessary expenses often imposed by third-party managing agents. Additionally, they gain control over long-term property upkeep, ensuring higher standards and better value for money.
Growth Trends of RTM Companies
The number of new RTM companies formed each year has steadily increased over the past decade. Below is a graph illustrating the growth in new RTM companies from 2015 to 2024:
Data Source: Juxtablock
The data highlights a steady increase in RTM formations, with notable surges in recent years, reflecting heightened awareness and ongoing leasehold reforms.
Challenges Facing RTM Companies
Despite the growing popularity of RTM companies, there are several challenges that leaseholders must navigate:
- Legal and Procedural Complexity: While RTM laws exist, the process can be complex, involving formal notices, strict timelines, and legal scrutiny. Some leaseholders find it difficult to navigate without professional legal assistance.
- Opposition from Freeholders: Many freeholders resist RTM claims, often challenging applications on technical grounds, leading to disputes that can delay or even prevent the takeover.
- Ongoing Management Responsibilities: Once an RTM company is established, leaseholders must manage the property efficiently, which requires commitment and expertise.
Conclusion
The growth of Right to Manage companies in the UK over the past decade signifies a shift towards leaseholders asserting greater control over their properties. Driven by frustrations with existing management structures, legal reforms, and increased awareness, more leaseholders are opting for RTM as a viable alternative. While challenges remain, the trend is expected to continue as government policies evolve to make the process more accessible and fairer for leaseholders. As awareness grows and reforms are enacted, RTM companies will likely play an increasingly pivotal role in the UK’s leasehold sector.
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