What is a Resident Management Company? Everything you need to know
A Resident Management Company (or RMC) is a legal entity formed to oversee the management and maintenance of residential and communal areas in a multi-unit building or development. RMCs are typically established in leasehold properties, giving residents greater control over service charges, maintenance and day-to-day property management decisions.
In this blog, we discuss the purpose and responsibilities of a Resident Management Company, with key considerations for an RMC explained.
How do I set up a Resident Management Company?
RMCs are often set up by property developers for new build developments in order to allow residents and leaseholders greater control in the management of their homes. An RMC is usually set up as a limited company and is therefore governed by the Companies Act 2006.
Once established, a Resident Management Company operates as a non-profit company, with leaseholders acting as shareholders or members. As a result, rather than decisions being led by external freeholders or landlords, residents can ensure that decisions are made in their best interest. This means services can be tailored to the specific needs of the development, whether it be landscaping, security, or communal facilities for example.
Residents can become directors of the RMC, usually on a voluntary basis, and shares in the RMC are typically passed onto new leaseholders when apartments are sold.
What is a Resident Management Company responsible for?
The development specific responsibilities of a Resident Management Company are defined within the property’s lease. These obligations can include financial management, compliance with lease agreements, and residential estate management responsibilities that ensure the property is maintained to a high standard. Directors of RMCs are legally required to act in the best interests of the company and its members, which includes managing service charge funds transparently and complying with health and safety regulations.
What challenges do RMCs face?
Resident Management Companies are responsible for a wide range of services, but navigating areas like leasehold law and health and safety regulations can be challenging for a Resident Management Company if those involved lack the relevant expertise. Working with a leading property management agency like Rendall & Rittner can help overcome these challenges, with RMCs able to benefit from a broad skillset and wide range of supporting services such as the latest advice on ever evolving health and safety legislation and regulations.
Is it better to create an RMC or use an existing property managing agent?
This is a question we often hear, but these two companies serve quite different functions. Resident Management Companies are typically established by property developers to provide residents and leaseholders with greater control over the management of their homes at new developments. For already established developments, leaseholders may have the opportunity to create a Right to Manage company (RTM) in order to take over the management of their building from their landlord.
Although Resident Management Companies or Right to Manage Companies are both formed to oversee the management of a development, that doesn’t mean that leaseholders must operate alone to achieve this. The directors of an RMC or RTM can appoint a professional property managing agent.
Managing agents like Rendall & Rittner play a crucial role in assisting with legal and health and safety compliance, financial planning, contractor selection, and the overall residential block management. A professional managing agent like Rendall & Rittner also brings broad industry expertise and regulatory knowledge that evolves with changing needs.
What questions should an RMC ask when choosing a property managing agent?
Before deciding which property managing agent to choose for the management of an RMC-controlled property, it is important to have a clear understanding of what services are important to meet the specific needs of the site. For example, is it important that the company can provide access to a locally based property manager, that it demonstrates expertise in Mechanical, Electrical and Plumbing systems or that it has a strong financial acumen? Resident management company services cover a broad range of areas and all facets may not be provided by every managing agent, so outlining a list of expectations before starting the search can help narrow the options down.
It is also important to consider that as there is currently no formal regulating body for property management in the UK, it may be worth looking into those that have sought voluntary regulation and who have also received highly relevant accreditations and awards.
Rendall & Rittner, for example is regulated by RICS, and has accreditations from The Property Institute (TPI), British Safety Council, ISO and Investors in People, providing external verification of our service quality and transparency. Before deciding on your managing agent, it is worth asking for details about any regulating bodies that the company is governed by and whether your funds are protected by schemes such as the RICS Client Monies Protection scheme.
We have created a comprehensive guide to property management where you can find out more about what a good property managing agent looks like. This guide also includes an interactive checklist to help you assess whether a property managing agent meets your needs and expectations.
