In December 2018 the Law Commission published a consultation paper on reform of the Right to Manage ("RTM") legislation: "Leasehold home ownership: exercising the right to manage", available here. The paper is one part of a wider investigation into proposed leasehold reform, as a result of earlier consultations having identified various problems with leasehold reform legislation. The Law Commission has been tasked with improving consumer choice and providing greater fairness and transparency for leaseholders.
So what is the Right to Manage?
RTM was introduced by the Commonhold and Leasehold Reform Act 2002 to allow leaseholders to form a company and take over the management of their building from the landlord. This RTM company would be responsible for the vast majority of building and services management functions including insurance and maintenance.
Why the need for reform?
Put simply, very few RTM claims reach a successful conclusion. In the early stages of the consultation process, the Law Commission asked industry stakeholders for their opinion on why this was the case. Their feedback included reasons such as the RTM procedure being too technical and prone to delay, the qualification criteria being too restrictive and there being a lack of support available to leaseholders at the point of taking over the management of a building.
The Law Commission intend to tackle these issues with an overhaul of the RTM legislation. The consultation paper highlights ten broad areas where the RTM legislation is too restrictive and sets out further details their proposals for reform. The ten areas include proposals for which properties might be eligible, to the management functions and eventual termination of an RTM.
The bigger picture
The benefits of a successful RTM claim are clear to see. A block of flats run efficiently by an RTM company will not only bring accountability, control and choice to those who actually live in the block of flats; it will help bring communities closer together and potentially give leaseholders a sense of responsibility beyond the four walls of their flat.
It is also easy to imagine scenarios where a property is better left to be managed by a third party. Neighbours may disagree over management decisions, or may struggle to make objective decisions. In buildings where leasehold properties change hands more regularly, initial interest in RTM may wane. New legislation must also serve to protect landlords' interests where properties are being ineffectually managed.
If the RTM legislation can be reformed to ensure it is more readily available and the technical mechanisms potentially simplified somewhat, then this should help to ensure that those who want to manage their own properties are provided with the accessibility, tools and resources available to do so.
Have your say, the consultation period is open until 30 April 2019 and comment may be made via the online form here.
