Embargoed: 00.01 January 28 2019
LKP warmly applauds the Law Commission’s proposals to reform right to manage, published today (press release below).
Sebastian O’Kelly, director of the Leasehold Knowledge Partnership said:
“For years commercialisers in the leasehold sector have run rings around this legislation, either thwarting leaseholders efforts to gain control of the management – and money – in their buildings; or wasting a lot of time with meritless delays.
“The most pedantic and abstruse arguments have been deployed to derail right to manage, sadly with some success as a credulous property tribunal has bent over backwards to accommodate silly challenges to leaseholders’ Parliament-granted rights.
“It has become a cottage industry, with legal professionals dreaming up convoluted impediments to right to manage.
“The court record of these cases shows the aggressive determination of monetisers in the sector – often hiding behind nominee directors or based offshore – to keep control over the management of blocks of apartments.
“As they are not supposed to be profiting from this – ground rents are the only legitimate annual income stream under the lease – one has to question why they are doing it.
“Of course, owning the freehold to a block and controlling the management is a licence to print money and abuse power. This is why right to manage was introduced.
“To make it effective is essential.”
Here are a few appalling cases:
Law Commission Press Release
Embargoed until 00.01 on Monday 28 January 2019
Make it easier for leaseholders to manage their properties, propose Law Commission
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: 3
• Leasehold home ownership: buying your freehold or extending your lease (LINK); consultation closed.
• Reinvigorating commonhold: the alternative to leasehold ownership (LINK); 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/
For all media enquiries, please contact Dan Popescu on 07784 275513 or Daniel.firstname.lastname@example.org