Our Senior Partner and Head of the Landlord & Tenant team, Mark Chick, provides further commentary and opinion in this latest article.
As I wrote here in July, the Law Commission recently presented its recommendations to the Government about what changes there should be to the law for any leaseholders wanting to change their property manager.
Previous Housing Ministers have always said the recommendations would be accepted. However we’re on our tenth Housing Minister in ten years so whether this one will survive long enough to begin the process of putting these recommendations into the next Queen’s Speech; seeing them converted into a Bill and then passed as an Act of Parliament is anyone’s guess.
The right to manage (“RTM”) was introduced in 2002 to give leaseholders the ability to take over the landlord’s management functions in respect of their building, without having to buy the freehold. It is a “no-fault” right, which leaseholders can exercise without the need to prove a complaint against their landlord or managing agent.
The relevant legislation is the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”). The 2002 Act sets out what was intended to be a simple process, beginning with the leaseholders setting up a dedicated “RTM company” of which the leaseholders are members. If the RTM is claimed successfully, the leaseholders, through the RTM company, take control of services, repairs, maintenance, improvements, and insurance in respect of their building.
Government asked the Law Commission to review the existing legislation with a view to making the RTM procedure simpler, quicker and more flexible, particularly for leaseholders. It has now published its final Report setting out recommendations for reform, available at https://www.lawcom.gov.uk/project/right-to-manage/.
There are nearly 80 recommendations. Here is a snapshot
Under the 2002 Act, the RTM applies only to flats; houses are excluded. This exclusion was introduced, in our view, not for any principled reason, but rather because many of the RTM criteria were transposed from the enfranchisement provisions in the Leasehold Reform, Housing and Urban Development Act 1993, which concerned only flats. The Law Commission recommends that the RTM should be exercisable in respect of leasehold houses as well as flats: paragraphs 3.7 to 3.12.
In order to integrate houses into the RTM, the Law Commission recommends that no distinction should be drawn in the legislation between a “flat” and a “house”. Instead, there should be a single concept of a dwelling, such as “residential unit”: paragraphs 3.20 to 3.37.
They recommend that premises can qualify for the RTM if they are a (part of a) building reasonably capable of being managed independently, even if they do not satisfy the requirements for self-containment: paragraph 3.38 to 3.93. In practice, this means that leaseholders in premises currently managed independently can simply point to that existing management arrangement as evidence that the premises qualify for the RTM.
The Law Commission recommends that the non-residential limit be increased to 50%. This means that only premises in which more than half of the total internal floor area is occupied by non-residential parts will be excluded from the RTM: paragraphs 3.94 to 3.126.
Another recommendation is that the RTM be exercisable in respect of premises which comprise or contain at least one residential unit held by a qualifying tenant, rather than two as in the current law: paragraphs 3.127 to 3.139. This change is necessary to incorporate leasehold houses within the ambit of RTM. In premises with only two residential units, the Commission recommends the removal of the existing rule that both leaseholders must participate in the RTM claim: paragraphs 3.157 to 3.183.
These are just a few of the recommendations, but whether the Rt Hon Christopher Pincher MP will deliver on his previous Housing Minister colleagues’ promises to adopt the Law Commission’s recommendations, well, let’s wait and see. But don’t hold your breath.
If these recommendations do become law it will simplify the process to some extent, but in our view a lay person will still require a professional solicitor and surveyor’s advice and guidance.
If you would like to discuss this or something related to a leasehold or freeholder’s issue please contact our leasehold team at Bishop & Sewell to discuss any of the above issues email firstname.lastname@example.org or call 0207 631 4141 and ask to speak to a member of Landlord and Tenant team.
About Mark Chick
Mark is our Senior Partner and Head of the Landlord & Tenant team. Recognised as a leading UK authority in this area of the law he is a Leasehold Reform specialist and has been a Partner at Bishop & Sewell LLP since 2006.
He is a director and a founder committee member of the Association of Leasehold Enfranchisement Practitioners (ALEP) the sector body to which all reputable valuers and solicitors working in the field of Leasehold Reform now belong.
Over the past ten years he has developed Bishop & Sewell’s Landlord & Tenant practice to be one of the largest specialist teams in the UK. Under his direction the department has flourished and he now leads a team of specialist solicitors and property experts.
He is a very well-known and highly-regarded specialist in Landlord & Tenant matters. His expertise when it comes to leasehold reform issues is unparalleled, and in 2016 he was awarded Solicitor of the Year at the Enfranchisement and Right To Manage Awards (ERMAs).
Mark is a member of the Leasehold Valuation Tribunal Frequent User Group Panel. His views as a leasehold reform specialist dealing with freehold purchase, lease extension, services charges and landlord & tenant matters can also be followed direct on LinkedIn and Twitter.
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The above is accurate as at 16 September 2020. The information above may be subject to change during these ever-changing times.
The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.