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Establishment of RTM company vs flats management company: owning in a leasehold flat means much of the care and maintenance of your home has to be a shared responsibility with the fellow flat owners. In many cases these owners often prefer to take on full responsibility of that rather than leaving it to a third party and as such form a company to manage those responsibilities, that can still be sub-contracted but with more control offered to the leaseholders. This article will explain the two main options and their differences: -
Right to manage companies incorporation: the right to manage companies or RTM companies were established under the Commonhold and Leasehold Reform Act 2002. Subject to certain criteria – which most purpose-built modern blocks of flats meet – the leasehold owners have the right to serve notice on the landlord of their intention to set up and RTM to which he cannot oppose. There is no need for court action and the RTM can be registered simply and quickly via Coddan.
There is very little opportunity to vary the format of an RTM company other than in company name and the flat owners become members of an RTM company without shares and hold shared responsibility for such things as the upkeep of shared areas and the building structure. This is usually funded by an annual management fee. Whilst they have better control of potential upkeep costs compared to a landlord chosen company, they do not become landowners of the freehold in law.
Flat management companies registration: a flat management company operates in a similar way in practice but in technical terms differs since it is normally set up as a private company limited by shares. Each owner of a leasehold within the property – they needn't all be within the same block - will also own a share in the company that owns the freehold on which they stand and as a shareholder of that company have the right to vote on how monies are raised and spent on the upkeep of the relevant shared areas and freehold. They own the whole land unlike members of a RTM company.