FID Trust International

This type of company is usually set up to manage a property which is divided into separate units, each unit being owned separately. This type of company can be used if you have a large house which has been divided into separate flats:

  1. The right to have voting powers over the property you live in.
  2. Control over the day to day running of a building.
  3. Responsibility over the building you live in.
  4. Don’t need permission of the landlord to set the company up.

We have the software which allows you to adopt/upload your own specific Articles of Association to your company.

Unless there is a landlord of the property retaining this interest, the simplest way to manage this is for a company to be set up to own a freehold of the property, and for each owner of a flat (or other unit) to have interest in the Company.

RTM is exercised by an RTM Company, and not the individual leaseholders, and so cannot be done without the formation of the RTM Company. It is the RTM Company which obtains the right and which takes responsibility for the management of the property.

An RTM Company must be a private limited by guarantee company and registered with the Registrar of Companies House. The RTM Company must be run according to its Memorandum and Articles of Association. These have been prescribed by the Government.

A minimum of two qualifying tenants may set up the RTM Company; it does not require the full number of participants at this initial stage.

Important: When registering the RTM Company at Companies House it is important to ensure that all the necessary documentation is provided, and that it is completed correctly to avoid any unnecessary delays. This includes the signing, dating and witnessing of the list of names and addresses of the members of the RTM Company that is required. If you are in any doubt about what is required you should seek independent advice.

Exercising your right to manage: Once you have met all the qualifying conditions and set up a RTM Company there are a series of notices which must be served on all connected parties before the right to manage can be acquired. These will be explained in the following paragraphs.

Where a RTM Company has acquired RTM, it will be responsible for the management functions under all of the leases held by qualifying tenants in the building. You will need to look at all the leases of the qualifying tenants to establish what it provides for in relation to the management. But in most cases a RTM company would become responsible to all leaseholders for:

  1. services;
  2. repairs;
  3. maintenance;
  4. insurance; and
  5. management of the whole or part of the premises.

The building will qualify if:

  1. at least two thirds of the total number of flats contained in the premises are let to qualifying tenants;
  2. the premises contain two or more flats held by qualifying tenants;
  3. the premises consists of a structurally detached building; or
  4. the premises consists of a self contained part of a building, which can include other property enjoyed by qualifying tenants under the lease, such as gardens and garages. A self-contained part of a building may also qualify if:
    • it constitutes a vertical division of the building;
    • the structure of the building is such that it could be redeveloped independently from the rest of the building; and
    • the services are provided independently from the occupiers of the rest of the building; or
    • they could be provided independently without carrying out works which would result in a significant interruption to the services provided to the occupiers of the rest of the building.

(Services are those that are provided by means of pipes, cables and other fixed installations).

The building will not qualify if:

  1. more than 25% of the internal floor area is in non-residential use;
  2. it contains separate self-contained parts where the freehold of those parts is owned by different landlords;
  3. it is a converted property of four or fewer flats where either the landlord or an adult member of the landlord’s family lives in one of the flats as their only or principal residence;
  4. the local authority is the immediate landlord of any qualifying tenants; or
  5. RTM has already been acquired and continues to be exercised.

Where a RTM Company ceases to be responsible for the management of the premises, it will not be possible to re-exercise RTM for that building for four years. However, a LVT can determine that the right can be exercised again within that four year period. (This bar does not apply, however, if RTM has ceased as a result of a RTM Company being used to acquire the freehold).

Qualifying tenant

A qualifying tenant is any leaseholder whose lease was originally granted for a period exceeding 21 years. It does not matter if a lease has less than 21 years left to run.

Leaseholders whose leases have expired, but who remain as tenants under the provisions of Part 1 of the Landlord and Tenant Act 1954 or Schedule 10 to the Local Government and Housing Act 1989 are also regarded as qualifying tenants.

Where a lease is owned with someone else both would be the qualifying tenant of their flat.

Trustees who are the qualifying tenant of a flat will also be entitled to become members of the RTM Company, unless the instrument regulating the trust specifically provides otherwise.

If there is more than one long lease of a flat, the qualifying tenant will be the tenant with a long lease who has not sub let to another tenant on a long lease. So if, for example you have a long lease from a landlord who also has a long lease and you have not sub-let, you will be the qualifying tenant, and not the person who granted you the lease.

A leaseholder with a shared ownership lease will only be a qualifying tenant for the purposes of RTM if he owns 100% share of the lease. (A shared ownership lease is a special type of arrangement, which is not the same as a leasehold flat that is owned jointly with someone else).

A long leaseholder who owns a business lease will not be a qualifying tenant for the purposes of RTM.

Obligations under leases

The RTM Company has the legal right to take action to enforce any obligation entered into by any tenant of the building under a lease. The RTM Company may exercise any power granted under a lease to enter the premises to check compliance with the term of that lease, but cannot exercise any powers of re-entry or forfeiture.

The RTM Company must monitor tenants’ compliance with the terms of their leases, and report to the landlord any breaches which are not put right within three months of the breach coming to the attention of the RTM Company. The RTM Company will not have to report to the landlord any breaches of covenants if:

  1. the failure has been remedied;
  2. reasonable compensation has been paid in respect of the failure; or
  3. the landlord has notified the RTM Company that it need not report to him the type of failure concerned.

Membership of a RTM Company

All qualifying tenants are legally entitled to become members of a RTM Company. To exercise RTM, membership of the RTM Company must equal at least 50% of the number of flats in the block. This is a legal requirement and if it is not met, you will not qualify to exercise RTM for your building.

Where there are only two qualifying tenants in the block, both must be members of the RTM Company.

The Notice of Invitation to Participate

A RTM Company is legally required to serve a notice on all qualifying tenants (except the landlord) who are not members of the RTM Company. This is known as the “Notice of Invitation to Participate”. This notice informs all qualifying tenants that a RTM Company has been set up for the purpose of acquiring RTM for their building; and that they are entitled to join in the proceedings themselves should they wish to do so.

A RTM Company will not be responsible for the management of any flat that is not held by a qualifying tenant. This will include flats that are rented and used for commercial purposes, although a RTM Company will be responsible to all parties for the management of the common parts and the fabric of the building.

Some leases provide that a leaseholder must obtain the landlord’s, or a third party’s consent before carrying out certain activities. Where a qualifying tenant’s lease specifies that the landlord’s, or a third party’s consent must be obtained for approval this will then transfer to the RTM company. The RTM Company will only have the right to grant approval or give consent in relation to residential long leases.

However, a RTM Company cannot grant an approval to any qualifying tenant’s request without having given 30 days' notice to the landlord in respect of approvals for the following:

  1. assignments;
  2. underletting;
  3. charging;
  4. parting with possession;
  5. the making of structural alterations;
  6. improvements;
  7. alterations of use.

In all other cases, the RTM Company cannot grant approvals without having given the landlord 14 days' notice.

If you choose us to incorporate RTM Company you will receive the Business Package which includes:

  1. Certificate of Incorporation in PDF Format.
  2. Memorandum of Association.
  3. Minutes of the First Meeting of the Directors.
  4. Fully Written up Company Register.
  5. Share Certificate(s).
  6. Comb bound printed copy of the above emailed company documents.
  7. Additional Copies of the Memorandum of Association laminated (X 5).
  8. Articles of Association.
  9. Registered Office with OFFICIAL POST ADDRESS. Facility for the first year (In London or Doncaster) with possibility to prolong for the yearly fee.
  10. Nominee Secretary for the first year with possibility to prolong for the yearly fee.
  11. Company Register (Boxed Corporate Kit.)
  12. Recorded 1st Class Postage of all the company documents to UK (overseas charges apply additionally).
  13. Certificate of Incorporation (Laminated).
  14. Web Filing Code included for future amendments to your company.

Please contact us by telephone 0207 439 3400 (0044 207 439 3400 – International) or E-mail if you wish to incorporate Right to Manage Company in the United Kingdom.