The Law Commission has recently published a consultation paper on the Right to Manage (RTM). Open until 30 April 2019, the Commission has proposed a number of reforms in a bid to make the RTM process simpler, quicker and more accessible to leaseholders.
What is the Right to Manage?
The Right to Manage was introduced by the Commonhold and Leasehold Reform Act 2002. It gives certain leaseholders the right to take over control of the management of their building, provided the qualifying criteria are met. A company needs to be created to take over the management responsibilities and serve various statutory notices. If the landlord objects, depending upon the nature of the objection(s), the matter will be determined by a court or tribunal. The Right to Manage is a popular option for leaseholders wanting to take control over how their building is run. However, it has been criticised for excluding many estates because of their physical layout, as well as being costly, technical and slow.
What are some of the Law Commission’s proposals?
- Permitting multi-building RTM on estates. Presently the legislation applies to a single building containing flats. This means a development consisting of 3 separate buildings would require 3 separate RTM applications;
- Relaxing the qualifying criteria to encompass buildings with more than 25% non-residential space, and leasehold houses, and clarifying whether owners of shared ownership leases may participate;
- Reducing the number of notices that leaseholders must serve;
- Education and training for RTM directors;
- Simplifying the notices that are often invalidated by relatively insignificant errors, causing litigation and potentially defeating the RTM claim;
- Requiring the early exchange of information between the landlord and RTM company before management is transferred to the RTM, providing deadlines for the landlord to comply with;
- Providing the First-Tier Tribunal with exclusive jurisdiction over disputes arising from the RTM provisions, with power to waive minor procedural mistakes.
The Right to Manage offers a solution to many flat owners’ complaints about perceived high cost and ineffective management in their blocks, by giving them the chance to see if they can do better. However many developments are excluded from the legislation, or the lessee flat owners are put off by the complexities of the procedure. These reforms should enable RTM to better fulfil its potential.
Whether or not the reforms achieve these objectives, so long as the Right to Manage is available in your case (which should be carefully checked), it can still empower the lessee flat owners to take control of insurance, maintenance and repair, appoint a managing agent of their choice, control service charges and enhance the value of their flats.
We encourage leaseholders to comment on the Law Commissions’ proposals which can be found here.