Leasehold ownership: Law Commission consultation on Right to Manage

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Perceived problems with existing ‘Right to Manage’ (RTM) rules have meant only an estimated 4,000 out of an estimated 4 million properties have exercised this option for leaseholders to take over the management of their building.  The Law Commission is therefore consulting on proposals to make the RTM regime simpler, quicker and more accessible.  Housing Management & Litigation experts Karl Anders explains.

What is RTM?

The Commonhold and Leasehold Reform Act 2002 allows qualifying long leaseholders of flats to establish a company – known as a Right to Manage or RTM company – through which leaseholders may themselves manage the building, rather than their landlord.  However, the existing regime has been criticised for being too complex, restrictive, uncertain and expensive.

What are the proposals for reform?

At the government’s request, and to coincide with the consultation on commonhold and the ongoing review of potential unfairness within the leasehold market, the Law Commission is now consulting on reform proposals, which include:

  • relaxing the qualifying criteria, so that leasehold houses and buildings with more than 25% non-residential space could qualify;
  • allowing RTM companies to manage multiple buildings on an estate, instead of just single buildings;
  • simplifying the procedural steps which leaseholders must undertake and extending the power of the First Tier Tribunal to waive procedural errors;
  • setting out clearer rules for various aspects of the RTM regime;
  • requiring each party to bear its own costs of any Tribunal action; and
  • removing the automatic right for landlords to recover their reasonable costs of the RTM process from the RTM company.

Next steps

The Law Commission is holding regional events aimed at professionals in the legal and property sectors so that those interested in proposed reforms to both commonhold and RTM can give their views.  Details of the events are available here.

The consultation is open until 30 April 2019 and can be accessed here.