Law Commission recommends changes to Right To Manage but nothing happens fast when you are dealing with property matters however, there is a intention to look to change this when it comes to Right To Manage (RTM) in order to make it quicker and more simple and hopefully cheaper to implement, especially for the leaseholders. Their report titled “Leasehold home ownership: exercising the right to manage” was published in the summer having considered the present situation of a right which was introduced in 2002 for the leaseholders, if they wish, to take over the management affairs of their apartment block building. Following wide consultation The Law Commission’s report contains a total of some 101 recommendations.
Law Commission | Right To Manage Recommendations
They propose changes to the qualifying criteria to widen the scope of qualifying buildings in recommending that RTM should be exercisable against a new classification; a “residential unit” (to include flats and houses).
The Law Commission concluded that a building with 50% non-residential parts can “fairly be described as a residential building”. In these circumstances by taking action, a RTM company would not obtain the right to manage commercial units within the same building.
They have also recommended further changes whereby a single RTM company could acquire the RTM in respect of more than one building in a single RTM claim, not needing for there to be a link between the buildings.
The declared aim is to enable the Right To Manage procedure to be more simple and accessible. It is proposed to remove the requirement for notices to be serviced on all of the leaseholders inviting them to join with the RTM initiative, with some notices being able to be served by email. The digital impact is key with the recommendation permitting signature of the claim and other notices within the procedure, electronically, which should save considerable time.
One of the fundamental proposals by The Law Commission is to limit the circumstances where a landlord can challenge a move to Right To Manage, which currently can be procedural failures or omissions. Furthermore, the Tribunal would have power to waive procedural defects, reflecting their positivity. The Law Commission’s comprehensive 101 recommendations include that the Tribunal should be able to order a variation to a lease if the acquisition of the RTM makes management under the original leases unworkable. I think it is particularly poignant that the recommendation is made for training for leaseholders to act as company directors of RTM companies should be available free of charge. It is evident that currently this role is very misunderstood.
The requirement for landlords to provide a clear reconciliation of each leaseholders’ service charge contribution and transfer what should be in the service charge account on the assumption that these have been collected will create interesting discussions. If sufficient sums haven’t been received, the landlord will be able to pursue the leaseholder for the arrears. However, in certain circumstances will be required to pay the shortfall themselves.
Procedural changes should simplify and expedite matters. This will assist in the aim of reducing the cost of making an RTM through the following further proposals. It is proposed for an RTM company to recover certain prescribed costs of management from the leaseholders, irrespective of whether the lease allows for this or not, and a RTM company would not be required to pay a landlord’s non-litigation costs. Landlords and RTM companies would bear their own costs of a Tribunal, subject to the Tribunal’s authority to order costs in various circumstances
The above is a brief overview of Law Commission recommendations on Right To Manage, it is now with the Government to decide the next step. No doubt there will be interesting and passionate discussions and debates. Even if a lion’s share of these recommendations are adopted it will be interesting to see how far things go and what impact is made. No doubt some grey areas and challenges will remain.