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The Law Commission recommends reform of the Right to Manage

Helena Bannister explores the Law Commission’s Right to Manage report.

On 21 July 2020 the Law Commission published three reports on commonhold; leasehold enfranchisement/freehold acquisition and the Right to Manage (RTM). The Law Commission makes hundreds of recommendations on these areas of proposed leasehold reform. This article will focus on the RTM report.

Read a summary of all three of the Law Commission’s reports

Right to Manage

The Commonhold and Leasehold Reform Act 2002 gave leaseholders the ability to take over the freeholder’s management functions without having to purchase the freehold. Current qualifying criteria have been deemed overly restrictive - it is not possible to exercise RTM on multiple buildings or buildings with more than 25% non-residential space. The Law Commission’s recommendations include:

  • The scope of buildings eligible extended, with the non-residential eligibility threshold raised to 50%.
  • An extension of the right to leasehold house owners and give multi-building schemes a route to RTM.
  • Removing the requirement that leaseholders pay the landlord’s costs of an RTM claim, including in any tribunal proceedings. Giving leaseholders significantly more control and certainty over the costs they will incur will bring the RTM within reach of more leaseholders.
  • Reducing the number of notices that leaseholders must serve in order to claim the RTM, and giving the tribunal the power to waive procedural mistakes in claim notices.
  • Clearer rules for the management of property which is not exclusive to the premises claiming the RTM, such as shared gardens and carparks.

Read the full Law Commission report

What next?

Alongside the Law Commission’s recommendations on commonhold and enfranchisement, the Government will now need to decide whether these proposals to make the RTM procedure more accessible and workable should become law. If so, it could see an increase in tenants seeking to obtain control of management of existing leasehold developments, particularly with the proposed change in the non-residential threshold which would make many more buildings eligible. These reforms have been long in the making, and it remains to be seen whether the Government now pushes for these reforms to be implemented sooner rather than later.

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