The Labour government has announced its intentions for leasehold reform during this parliament, but a great amount of the detail is still to be fleshed out. In the meantime, in the Landlord & Tenant team at Bishop & Sewell we have seen an increasing trend of leaseholders using existing Right to Manage legislation to take back control of the management and expenditure in their block while they await further reforms.
In the King’s Speech on 17 July 2024 the Government announced that it will bring forward new legislation that will ban the sale of leasehold flats and also that they will aim to establish commonhold as the default form of tenure. As well as promising swift action to implement the provisions of the Leasehold and Freehold Reform Act 2024, Labour has also said it will bring forth a Leasehold and Commonhold Reform Bill, which will introduce further reforms including a ban on the sale of new leasehold flats.
The Government also promised to enact the remaining recommendations in the Law Commission’s reports from July 2020, which include reforms to commonhold, enfranchisement, lease extensions and right to manage legislation, while the King’s Speech also stated that Labour intends to regulate existing ground rents and end the ‘injustices of forfeiture.’
However, as this is quite an ambitious and large-scale project and these larger pieces are not (in my view), likely to see much action until the next session of parliament. This could mean that it is at least a year or two before any further significant action on these bigger themes emerges. Hence in the meantime, the Right to Manage is being seen as a viable option for leaseholders to take matters into their own hands and to organise themselves perhaps in readiness for a later claim to the freehold.
What is the Right to Manage?
The Right to Manage (‘RTM’) is a statutory no-fault right introduced by the Commonhold and Leasehold Reform Act 2002 and provides a useful alternative to buying the freehold as there is no capital outlay (other than costs). Exercising the RTM enables leaseholders to take over the landlord’s management functions in respect of their building, without having to buy the freehold or gain the agreement of the landlord. Doing so puts the leaseholders, via their RTM company, in control of their own destiny as regards management and expenditure.
With no clear timeframe yet in place, leaseholders who wish to retake control of the management of their block and take back control over costs and service charges may well wish to consider pursuing RTM if their block qualifies.
For further information about the RTM process, please see the following webpage: https://www.bishopandsewell.co.uk/legal-services/property/landlord-and-tenant/right-to-manage/
Contact our Landlord & Tenant team
If you have a query concerning leasehold property, then please contact our expert Landlord & Tenant team by emailing leasehold@bishopandsewell.co.uk or call on +44(0)20 7631 4141.
The above is accurate as at 15 August 2024.
The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.
