What is a Residents Management Company
(Last Updated: 11/07/2023)
29/06/2023
9
4 min read
Key Takeaways
- RMCs are not-for-profit organisations formed by the residents of a block of flats who want to manage their building themselves.
- A residents management company (RMC) is different a from a right to manage (RTM) company. All residents become shareholders, with each flat representing one share.
- Directors are appointed by fellow shareholders, to oversee the management of the building on behalf of the company.
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.
 | 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.
 | 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.
 | 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.
 | 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
 | 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.
- 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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Estate
Written by:
Caragh Bailey
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
Reviewed by:
Andrew Boast
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.
