Non RTM (commercial) Units and Voting Rights of the Freeholder
Because this is a ‘no-fault’ process the freeholder is entitled to voting rights as it was considered that they should not be penalised in terms of the management of the building.
Although the RTM company’s management does not include commercial units, the overall management of the building will have some impact on the general operation of these other parts so the landlord will also be able to exercise votes in respect of these units. Allocation will be proportional to the relative internal floor areas of both the residential and non-residential parts of the building but will exclude the common areas. It is calculated by taking the total votes allocated to the residential parts and multiplying that number by the formula A/B so:
- A is the total floor area of the non-residential parts;
- B is the total area of the residential parts (calculated in square meters with fractions of less than half a square meter being ignored).
A six-storey block of flats has five residential floors comprised of 20 flats with 1 landlord. The ground floor of the building is non-residential, a mix of shops and storage areas. Working on the assumption that the internal area of each floor is 1,000 square meters (or 950 square meters when the staircase, corridors, entrance hall and other parts are excluded), the non residential internal floor area is 950 meters and the total residential floor area is 5 x 950 = 4,740 square meters.
The landlords’ votes for the non-residential parts will be the total votes allocated to the residential flats multiplied by the relative floor area.
Assuming that the 20 flats each have 1 vote then the calculation is:
20 x 950 = 4750 = 4 votes = 20 for the leaseholders and 4 for the landlord.
If there is a dispute on the measurement of the floor area the prescribed Articles of Association provide for this to be referred to an independent chartered surveyor who will act as an expert, not an arbitrator. He should be selected by agreement between the parties is possible and if not, by the President of the RICS. His fees will be payable by the RTM company but the surveyor has the discretion to direct that some (or all) of his fees be reimbursed by the individual member(s) of the RTM company that raised the initial question.
His decision, based on his own measurement will be final and binding upon the RTM company.