LC: Make it easier for leaseholders to manage their properties

28 Jan 2019 12:52 PM

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.

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. We have been told that the process is:

• 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.

Law Commission proposals

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 it can resolve disputes quickly, and waive minor procedural mistakes made in the process of claiming the RTM.

Stephen Lewis, Commercial and Common Law Commissioner, said:

“The right-to-manage process is not working at the moment and change is needed.

“This is a very practical project and we’ve been focused on developing proposals that make sure the Right to Manage is more user-friendly, particularly for leaseholders.

“We look forward to hearing how the public thinks we can make the process as effective as possible.”

Housing Minister Heather Wheeler MP said:

“This Government is determined to reform the leasehold sector to better support homeowners. This includes making it easier for those who wish to exercise their Right to Manage and take direct control of their block.

“I welcome the Law Commission’s consultation proposals and encourage all those with an interest to come forward and offer their views.”

Welsh Government Minister for Housing and Local Government Julie James said:

“Right to Manage has not been widely adopted in Wales, and we have heard anecdotal evidence that the procedures are difficult and allow freeholders to obstruct the wishes of leaseholders attempting to exercise the right.

“We want to make it easier for leaseholders to take ownership of managing their property and we welcome the Law Commission’s proposals to reform the process”.

Notes for Editors

The Law Commission has released a Consultation Paper today (28 January 2019) containing significant proposals for change, and inviting the public to respond with their views.

The RTM consultation will be open until 30 April 2019.

This is part of the Law Commission’s project to reform leasehold law in England and Wales. As part of this work, the Law Commission has published two other consultation papers:

• Leasehold home ownership: buying your freehold or extending your lease; consultation closed.
• Reinvigorating commonhold: the alternative to leasehold ownership; consultation open until 10 March 2019.

You can find out more about the project and how to respond to the consultation here: https://www.lawcom.gov.uk/project/right-to-manage/