Understanding Resident Management Companies and RTM Property Management

In recent years, the concept of residents taking an active role in managing their own properties has gained significant traction across the UK. Terms like Resident Management Company (RMC), RTM Property Management, and Residents Management Company are increasingly relevant for leaseholders and property owners who want greater control over how their homes and communal areas are maintained and managed.

What Is a Resident Management Company?

A Resident Management Company (RMC) is a legal entity formed by leaseholders or residents of a building or estate to manage and maintain the property themselves, rather than relying on a traditional third-party managing agent. This company is usually incorporated as a limited company and is responsible for overseeing service charges, repairs, insurance, and general upkeep of the property.

The primary benefit of an RMC is that it puts residents in the driving seat, giving them direct control over decisions that affect their living environment and service costs. By having a say in how funds are spent and which contractors are hired, residents can often improve service quality while potentially reducing management fees.

What Is RTM Property Management?

RTM Property Management stands for Right to Manage, a legal right that allows leaseholders of a building to take over the management of their block without having to prove mismanagement or get the landlord’s consent. Introduced under the Commonhold and Leasehold Reform Act 2002, RTM enables leaseholders to form an RTM company, similar in structure to a Resident Management Company, to assume responsibility for the management functions.

RTM Property Management empowers residents to run the day-to-day operations, arrange repairs and maintenance, and manage service charges directly. This legal framework provides a clear path for leaseholders dissatisfied with their current management arrangements to take control and ensure their interests are better represented.

How Do Resident Management Companies and RTM Property Management Differ?

While both Resident Management Companies and RTM Property Management involve residents managing their properties, there are subtle differences:

• Resident Management Company (RMC): Usually established voluntarily by residents or leaseholders and may involve negotiation with the landlord or freeholder. The RMC owns the freehold or has an agreement to manage the property.
• RTM Property Management: Specifically granted under the Right to Manage legislation, allowing leaseholders to take over management without landlord approval if the criteria are met.

Despite the differences, both structures focus on giving residents greater control, transparency, and accountability in managing their communal areas and service responsibilities.

Benefits of Residents Management Company and RTM Property Management

1. Greater Control and Transparency

Residents involved in the management company can make decisions about budgets, contractors, and maintenance schedules, leading to better oversight and transparency of service charge spending.

2. Cost Efficiency

By managing the property themselves, residents can often negotiate better contracts and avoid unnecessary charges associated with third-party agents, potentially reducing overall costs.

3. Improved Service Quality

Direct involvement ensures that maintenance and repairs are completed to a standard that meets residents’ expectations. Quick decision-making means issues are addressed promptly.

4. Community Engagement

Both RMCs and RTM companies foster a stronger sense of community, as residents collaborate to maintain and improve their living environment.

Challenges to Consider

While there are many advantages, managing a property via an RMC or RTM company also requires commitment, expertise, and time from residents. They must comply with company law, manage finances responsibly, and understand relevant property legislation. Many RMCs and RTM companies therefore choose to outsource specialist tasks such as accounting or legal advice to professionals.

How to Set Up a Resident Management Company or RTM Property Management

Setting up either type of management company involves:

• Organising leaseholders to agree on the decision.
• Incorporating a limited company (Residents Management Company or RTM company).
• Registering the company with Companies House.
• Taking control of the management functions legally and formally.

For RTM, a formal notice must be served to the landlord, and specific legal procedures followed. Seeking professional legal and property management advice is crucial to ensure compliance and smooth transition.

Final Thoughts

The rise of Resident Management Companies and RTM Property Management reflects a broader trend towards empowering residents to take ownership of how their properties are managed. By providing a framework for residents to have more say in maintenance, budgeting, and service quality, these models foster better-managed properties and more engaged communities.

Whether through a voluntarily formed Residents Management Company or exercising the statutory Right to Manage, residents now have the tools to protect their interests and enhance their living experience — a win-win for leaseholders and property owners alike.