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Form an RTM Company - Benefits of Registering an RTM Company

Registering an RTM Company

Benefits of registering an RTM company: the right to manage company, or an RTM company, introduced in 2002 through the Commonhold and Leasehold Reform Act. It is one of the most specific company structures that groups of individuals can choose to form, being designed specifically for the leaseholders of properties who would like to take more control of their leased property. The formation of a RTM company is linked to an individual block and follows a particular process, giving leaseholders a number of benefits.

The logic behind right to manage is similar to the logic behind political movements for independence or regional autonomy, namely that the best people to run a property are the ones occupying it. Leaseholders who had problems with landlords mismanaging their properties historically had to prove a failure or wrongdoing on the part of their landlord to improve their conditions, whereas through a RTM company incorporation, leaseholders can take control of many aspects of their property without any such prerequisite.

Starting an RTM company gives members the power to manage their own property. This is a wide-ranging set of powers, ranging from the setting of budgets within a property to decisions relating to the provision of services within the block.

The key advantage of this type of arrangement, of course, is that the leaseholders of a property are generally the best placed group to look after their own interests. Maintenance costs and other expenditure often goes down in properties managed by incorporated RTM companies, while the level of service provision within those properties goes up. This is because the members of the registered RTM company are not only strongly motivated to provide the best results, but because they are located in situ and so can ensure that services are delivered to as high a standard as possible.

The structure of a RTM company is another advantage. Any qualifying leaseholder can become a member of the company, with each member having equal voting rights. As an RTM company does not have the power (or the need) to issue shares, the transition of membership rights between old and new tenants is a simple matter. New members can also be assured the same say as existing members.

As the RTM company assumes control of a property upon incorporation, the landlord cannot demand financial compensation, only demand the repayment of a reasonable level of costs. Overall, this gives leaseholders a huge amount of control over the services in their property, the potential for lower costs and a real say in how their own homes are run.