11-03-2019

Making it easier for leaseholders to manage their properties

The Law Commission is proposing changes that would make it quicker and easier for leaseholders to take control of the day-to-day management of their building. A partner in local law firm said, ““The right-to-manage process appears not to be working effectively for leaseholders at the moment and change is needed.”.

Currently, homeowners with long leases over flats can acquire the “right to manage” (RTM), which gives the homeowners, rather than their landlord, responsibility for management functions relating to services, repairs, maintenance and insurance. It is a “no-fault” right, so leaseholders can exercise it without having to prove mismanagement by their landlord. However, the current system is seen by many as too technical, slow, restrictive, uncertain and expensive.

What are the current problems with RTM? Leaseholders have found a myriad of issues with the current RTM system which have made it more difficult take over the management of their building. The process has been reported as:

  • Too expensive – The leaseholders have to pay most of the landlord’s costs.
  • Too technical – Small errors in complying with the procedural requirements can delay the process significantly and even prevent leaseholders acquiring the RTM.
  • Too slow – There are often delays in RTM companies receiving information necessary for them to manage the building effectively, such as the insurance history.
  • Too restrictive – The RTM is currently unavailable to owners of leasehold houses (as opposed to flats), those who want the RTM over multiple buildings on an estate and those whose buildings have more than 25% commercial or other non-residential space.
  • Too uncertain – RTM companies often don’t know the extent of the management functions they have become responsible for, particularly in relation to shared property like gardens and car parks.In response to these criticisms, the Law Commission is consulting on proposals that aim to make the process more accessible, simpler, quicker and less uncertain. The proposals include:
  • Extending the qualifying criteria so that leasehold houses, not just flats, qualify for the RTM.
  • Permitting multi-block RTM on estates and removing the 25% commercial space restriction.
  • Reducing the number of notices that leaseholders must serve as part of the claim process.
  • Introducing deadlines for procedures and exchanges of information between the landlord and RTM company, so that the process doesn’t stall.
  • Exploring options for a more balanced costs regime.
  • Giving the tribunal exclusive jurisdiction over RTM disputes so that it can resolve disputes quickly and waive minor procedural mistakes made in the process of claiming the RTM.The Law Commission released a Consultation Paper on the 28th January 2019 containing the proposals for change and inviting the public to respond with their views. The consultation will be open until 30 April 2019.