The Right to manage is the right granted to leaseholders of a block to take over the management function from the current freeholder by setting up a Right to Manage Company. The right is usually exercised by leaseholders who are unhappy with the way the freeholder is managing the block. The leaseholders usually want more control in the management decisions of the block and in decisions concerning the use of service charges contribution to help improve standards.
The law surrounding Right to Manage claims is complicated and governed by the Commonhold and Leasehold Reform Act 2002. It is crucial to understand the qualification criteria that applies to Right to Manage Claims to make a successful application to the freeholder.
Who can apply for the right to manage?
As a leaseholder you can apply for the right to manage if the following conditions are met:
- The building or part of the building contains at least two flats or more;
- At least two-thirds of the flats in the building must be held by long leaseholders, you are a long leaseholder if your lease was originally granted for a term of 21 years or more;
- At least 50% of the total number of flats in the building held by long leaseholders must take part in the right to manage procedure;
Does my building qualify?
- The building or part of the building must be self-contained;
A building is self-contained if the following four conditions are met:
1) There is a clear vertical division of the building;
2) The structure of the building is capable of redevelopment independently of the rest of the building;
3) The services in the building provided by pipes, cables and/or other installations are capable of being provided independently to the occupiers without significant interruption;
4) The building is structurally detached.
There is no statutory definition of what ‘structurally detached’ means instead basic guidance is found in case law which assists in interpreting its meaning. It is also important to consider the full extent of the Premises, whether the building is structural detached from any attachments it does have as well as the attachments and/or appurtenant land itself when considering this question.
Unfortunately, there is no simple answer to the above and whilst case law has provided basic guidance on these issues, it is important to obtain expert opinion and legal advice to avoid unnecessary litigation with your freeholder.
When do you not qualify for the right to manage?
- You do not qualify if you do not meet any of the above criteria;
- If you are a long leaseholder and your freeholder is a housing association or local authority;
- If the building contains more than 25% in commercial premises such as shops;
- If the resident landlord exemption applies, your building will not qualify.
The resident landlord exemption applies where the building is not a purpose-built block, has four or fewer flats and the freeholder (or an adult family member of the freeholder) has been resident in one of the flats for the last year as their principal home.