Law Commission wants change to make leasehold right to manage easier

The Law Commission is proposing changes that would make it quicker and easier for leaseholders in England and Wales to take control of the day to day management of their building.

Currently, home owners with long leases over flats can acquire the right to manage (RTM), which gives them, 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 but the Law Commission believes that the current system is seen by many as too technical, slow, restrictive, uncertain and expensive.

It explained that 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. Most notably
leaseholders have to pay most of the landlord’s costs, making it expensive.

They also think it is too technical which means that small errors in complying with the procedural requirements can delay the process significantly and even prevent leaseholders acquiring the RTM.

It is regarded as being too slow and there are often delays in RTM companies receiving information necessary for them to manage the building effectively, such as the insurance history.

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, making it restrictive.

It is also regarded as being 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.

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.

They also include allowing multi-block RTM on estates, and removing the 25% commercial space restriction as well as reducing the number of notices that leaseholders must serve as part of the claim process.

In addition, they would see the introduction of 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.

The Law Commission also suggests that 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 would help.

‘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,’ said Stephen Lewis, Commercial and Common Law Commissioner.