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Law Commission’s Proposals for Reform of Right to Manage for Leaseholders

Alexandra Mitchell, Solicitor at Berry Smith, considers the recent changes proposed by The Law Commission to the RTM legislation.

Changes have been proposed by The Law Commission to make it less complicated for leaseholders to obtain control of the day to day management of their buildings in England and Wales. They have released a 3 month consultation on how to alter the way leaseholders apply for the “right to manage” (RTM).

At the moment, in certain circumstances, leaseholders of flats can acquire the RTM giving them, rather than their landlords, the responsibility for the repairs, service, insurance and maintenance on a “no-fault” basis.

However, due to criticisms of the current RTM process, the Law Commission were asked by the Government to review the RTM legislation to make it simpler, quicker and more accessible.

Stephen Lewis, commercial and common law commissioner, has advised that the current process “is not working at the moment and change is needed.”

In light of the dissatisfaction the Law Commission released a Consultation Paper on 28 January 2019 containing significant proposals for change. These proposals include:

  • Relaxing the qualifying criteria so that both leasehold houses and flats qualify for the RTM;
  • Removing the 25% commercial space restriction;
  • Allowing multi-building RTM on estates;
  • Reducing the number of notices that must be served by leaseholders;
  • Giving the tribunal the power to waive procedural mistakes; 
  • Providing clearer rules regarding the exchange of information; and
  • Introducing a more balanced costs regime.

Many have welcomed the proposals, including Julie James, Welsh Government Minister for Housing and Local Government, who has commented  “RTM 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”.

Housing minister Heather Wheeler MP commented “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 RTM 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.”

The current system is certainly slow and technical and leaseholders are often reluctant to bear the costs involved in the process.  Hopefully these proposed changes by the Law Commission will make the process far more straightforward for leaseholders.

With around 25% of residential property transactions in England and Wales in 2017 being leasehold and with a vast range of problems being reported by leaseholders, such as freeholders blocking RTM attempts and excessive administration charges, the proposals will be a relief for many leaseholders. 

The level of service charge in leasehold developments is also often a contentious issue and anything that makes it easier for leaseholders to take control of their own service costs will be welcome.

The consultation follows the trend of attempting to redress the balance between residential landlords and tenants including the current consultation by the Westminster government on the most contentious issue of all namely ground rents and their review.   

 A number of consultation events are planned across England and Wales and the public are invited to respond with their views. The RTM consultation is open until 30 April 2019 following which a report will be published on the findings.

Please contact us if you would like more information on the issues raised in this article or any aspect of property law on 02920 345511 or commercialproperty@berrysmith.com