Members of a Residents Management Company cooperate to manage their block of leasehold flats. SAM Conveyancing explain how a residents management company works and is different from a Right to Manage company
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If you don't have a residents management company you may still have the right to manage.

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What is a Residents Management Company

29/06/2023
(Last Updated: 11/07/2023)
43
4 min read
Key Takeaways

What are the responsibilities of a residents management company?

A residents management company takes on all the responsibilities that would normally fall on the freeholder, or landlord:

Enforcing obligations on leaseholders.

An icon showing a gavel. Directors of a Residents Management Company must enforce the statutory and contractual obligations of the company and the leaseholders
Including invoicing and collecting service charges and ground rent, chasing and collecting arrears and taking action where tenants breach the terms of their lease. They must also make sure that the company adheres to legislation, consulting with the leaseholders on any proposed major works costing more than £250 to each leasehold.

Health & safety and fire risk assessments.

An icon showing a fire exit. A Residents Management Company is responsible for health and safety and fire safety including risk assessments
All communal areas and external areas need to be properly risk assessed, as well as any contractors entering the premises. If the residents management company do not conduct sufficient risk assessments they may be deemed liable for accident or injury. The residents management company is also responsible for installing smoke and fire alarms.

Electrical safety assessments.

An icon showing a hand an electrical plug. A Residents Management Company is responsible for electrical safety and testing
The management company is also responsible for assessing electrical standards and testing all electrical equipment provided by the landlord (white goods etc). Fixed wiring in all communal areas must be checked every five years by a qualified electrical engineer.

Cleaning, repairs and maintenance.

An icon showing a hand and spanner. A Residents Management Company is responsible for maintaining the building
Cleaning, repairs and maintenance of the roof, exterior, communal areas (inc. stairs and lifts), external gates and car parks. The management company is responsible for ensuring the contractors employed for these tasks are qualified to carry out the works safely. An avoidable accident or fall may result in an enquiry and prosecution.

Meetings and Administration

An icon showing a board meeting. A Residents Management Company is responsible for holding meetings and executing company admin and accounts
As a company the RMC must hold an AGM as well as any general or board meetings, to supervise the accounts and budget. Annual accounts must be prepared and submitted to companies house, building and public liability insurance policies must be adequate and company secretarial responsibilities must be fulfilled.

What is the difference between RTM and RMC?

The right to manage is a statutory right granted to qualifying leaseholders, who can apply to take on certain responsibilities of the management of their block. It is usually enforced by residents who are fed up with their current management, whether that is the freeholder directly, or an appointed management company.

Where all residents of an RMC are shareholders, only qualifying leaseholders have the right to manage. An RTM company separates the running of the building from the ownership of the freehold.

Do you want more ownership over your building and its management?

You will need to set up a private limited company to establish either a residents management company or a right to manage company. If you want full control over the building, you may be better of pursuing collective enfranchisement, where you and other leaseholders purchase the freehold, together.

Free initial leasehold advice

Arrange a free consultation with one of our experienced conveyancing executives on:

Lease Extension Solicitors Consultation
  • Lease extension
  • Purchasing the leasehold, freehold or share of freehold
  • Selling a leasehold property with a short lease
  • Extending the lease at the same time as you sell

We specialise in lease extensions and have RICS valuers for the premium/negotiation and solicitors for the section 42 notice and formal or informal extension.

Request a tailored quote for:
  • RICS Lease Extension Valuation or L2 Homebuyers Survey
  • Serving of the section 42 notice, or section 13 notice on the freeholder
  • Negotiation with the freeholder (with the support of your RICS valuer)
  • Completion of the legal work, including deed of variation
  • Application to Tribunal to determine the premium
  • Vesting order for absent landlords

What is the role of directors in residential management company?

The directors are responsible for the running of the company, including technical legal awareness and compliance and handling challenging interpersonal situations regarding both policing and enforcing the responsibilities of the other shareholders. The directors must avoid conflicts of interest and cannot accept benefits from third parties which could compromise their ability to exercise independent judgement.

Directors are nominated by the other shareholders, or they can volunteer with shareholder agreement. The specific responsibilities of the directors are laid out in the companies articles of association. If the residential management company is responsible for 6 or more dwellings it may be wise to involve the help of a professional managing agent as the role can be complex.

We recommend that directors of any company consider taking out public liability insurance to protect themselves against a potential mistake.

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Caragh Bailey, Digital Marketing Manager
Written by:

Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.

Andrew Boast of Sam Conveyancing
Reviewed by:
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.

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