LKP is very pleased that today sees the launch of the Law Commision review of the now broken right to manage legislation.
The full press release from the Law Commision is set out below:
Law reform needed to help leaseholders take control of their buildings
Housing Secretary James Brokenshire has asked the Law Commission to look at improving the laws which allow leaseholders to manage their own buildings.
The legislation on Right to Manage is meant to put power in leaseholders’ hands and stop abuse, by allowing some leasehold property owners to take over the management of a building.
But issues with the law have stopped its usage becoming widespread. And those who have taken up the option have found delays, costs and uncertainty.
Now, as part of wider efforts to build a country that works for everyone, Mr Brokenshire has tasked the government’s independent legal advisers with conducting a broad review of Right to Manage and propose reform recommendations which improve its use in practice.
The Rt Hon James Brokenshire MP, Secretary of State for Communities, said:
“This Government is tackling unfair and abusive practices within the leasehold sector every day. Our work with the Law Commission is just one aspect of this.
“Leaseholders wanting to manage their own building should be supported to do so without the fear of uncertain, lengthy and costly court procedures.”
Law Commissioner Stephen Lewis said:
“Putting power in leaseholders’ hands can help them take control of their homes and lead to cost effective, good quality management of shared areas.
“But the law isn’t working as it should be and leaseholders are missing out on their right to manage. We’ll be looking to get to the bottom of why that is, and come up with reform recommendations that work for everyone.”
Taking control of where you live
Under the Commonhold and Leasehold Reform Act 2002 leaseholders have the Right to Manage their building.
To use the right, leaseholders must set up a company and follow certain procedures.
Once set up, the company will be responsible for things like:
- collecting and managing the service charge
- upkeep of communal areas (such as communal hallways and stairs)
- upkeep of the structure of the building (such as the roof)
- dealing with complaints about the building from other leaseholders
But issues with the law have meant that uptake of the right to manage scheme has been low. In 2014, the CMA estimated that there were just 4,500 companies. And those that have set them up have found have found themselves facing further administrative burdens and court procedures in order to acquire the Right to Manage.
As a result, the Ministry for Housing, Communities and Local Government has asked the Law Commission to look at the law and come up with reform recommendations to improve how it works in practice.
The 12-month project will start now and a public consultation on provisional proposals will be launched later in the year.
In December 2017 the Law Commission announced that it was to start a project on residential leasehold and commonhold as part of its 13th Programme of Law Reform.
The residential leasehold and commonhold project aims to improve consumer choice, provide greater fairness, and make the process of enfranchisement easier, quicker and more cost effective.
In February a call for evidence on commonhold was been published with a full consultation due later in the year. On enfranchisement, the Commission will publish solutions for leasehold houses before summer recess 2018, followed in September by a detailed consultation on a new enfranchisement regime in respect of leasehold houses and flats.
LKP roundly endorses the fact that yet another of the issues we, along with the APPG on leasehold and commonhold reform, had proposed has now been adopted by the government. The sector supported by its ineffectual government quango the Leasehold Advisory Service will no doubt be quick to claim their long-standing support for change.
While RTM was always intended as a “no-fault” right for leaseholders to take control of their site, legal stratagems have repeatedly undermined it.
The CMA 2014 report shows there are just 4,500 RTM sites have been able to take up that right. That data for the CMA report was by LKP and while the figure has since increased the growth has slowed even further following the Court of Appeal Triplerose case where it was somehow decided that an RTM could only manage a single building.
LKP notes with some concern that the Law Commision press release again mentions the word building rather than buildings. There is also potential worry about the fact the commercial element rules are not mentioned along with the contentious matter of underground carparks and appurtenant land. However, it is assumed these will all be included in the 12-month review.
For some, it will be a little controversial that barrister Justin Bates, a man described in the Court of Appeal as “a seasoned warrior in the trench warfare over the right to manage” has been chosen to help work on the review.
Mr Bates was quick to advise he would be part of the project in an announcement to his Twitter followers at 5am on the morning of the Law Commision announcment. He then felt the need to make clear to his clients that he would only be at the Law Commission on a part-time basis and would continue to be available for other work.
LKP looks forward to discussing with Mr Bates his constructive input to the project. We are unaware of him ever having acted for leaseholders in a right to manage dispute.
It would be interesting to learn whether Mr Bates accepts that his argument about a piece of weatherstrip – as a supposed connection between two buildings – should be in future sufficient grounds to argue against an RTM.
Fortunately, this nonsense failed in the No 1 Deansgate case below (although the leaseholders had to be prepared for a full-on Court of Appeal battle before the freeholder backed down):
Legislation that allows leaseholders to manage their own buildings are to be reviewed by the law reform watchdog because schemes are not being taken up.James Brokenshire, the housing secretary, has asked the Law Commission to examine the legislation because of concerns over red tape, delays and cost