Leaseholds' New Rights to Manage their Flats Under The Commonhold and Leashold Reform Act 2002

Until the passing of the Commonhold and Leasehold Reform Act 2002 tenants of long leasehold flats had little opportunity to wrest control over the day to day management of their flats and block except where they could prove that their landlord was not managing them properly. Now a brand new non-fault based right has been brought out enabling tenants to club together and obtain the right to manage through the right to manage or RTM limited company of which they are each the members.

To be eligible the flats must form part of a building that:-

• is self contained (or can be re developed independently if it is part of another building);
• includes at least two flats;
• at least two thirds of the flats are let to tenants on leases of more than 21 years;
• any commercial or non residential part of the building is 25% or less of the total floor area of the building.

Additionally, the RTM company that is formed must be owned by at least half of the total flats in the building, i.e. each flat having a share in the RTM company, to ensure that transfer of the right to manage occurs by a majority wishing to transfer it.

We would assess eligibility and advise on the procedure which is relatively straightforward.

The right to manage is a useful option for those tenants who cannot afford to pay for the more expensive process of acquiring a new lease (that would require payment of a sum for that new lease). Similarly, for those tenants who could not afford to pay for the cost of enfranchising by way of acquiring a share in the freehold of their building or where the tenants as a whole cannot agree that they wish to enfranchise, or where all of those tenants that might be involved in the process cannot afford to pay for the costs and their share of the freehold.

For those tenants seeking to enfranchise or, at the very least, seeking to obtain more control over the running of the building in which their flat is situated, bearing in mind that that flat may well be their biggest investment as their home, the right to manage is also a useful starting point.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. Piper Smith Watton cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.