Main project: Residential leasehold and commonhold
Current project status
The current status of this project is: Analysis of responses.
List of project stages:
- Analysis of responses
- Initiation: Could include discussing scope and terms of reference with lead Government Department
- Pre-consultation: Could include approaching interest groups and specialists, producing scoping and issues papers, finalising terms of project
- Consultation: Likely to include consultation events and paper, making provisional proposals for comment
- Policy development: Will include analysis of consultation responses. Could include further issues papers and consultation on draft Bill
- Reported: Usually recommendations for law reform but can be advice to government, scoping report or other recommendations
Helping leaseholders take control over the running of their buildings. We are analysing responses to our Consultation Paper, “Leasehold home ownership: exercising the right to manage”. We intend to publish our final report in Spring 2020.
Terms of Reference
Government has asked us to review the RTM legislation to make it simpler, quicker and more accessible, particularly for leaseholders.
Our full Terms of Reference are available here.
The right to manage (“RTM”) was introduced to give leaseholders control over the management of their buildings.
Leaseholders can set up an RTM company, which can then acquire the landlord’s management functions. Once the transfer occurs, the leaseholders become responsible for things such as collecting and managing the service charge and the upkeep of communal areas.
What’s the problem?
Stakeholders have told us about numerous problems with the existing law, including:
- restrictive criteria, such as the inability of an RTM company to manage multiple blocks on an estate, the exclusion of premises with more than 25% non-residential space, and the exclusion of leasehold houses;
- seemingly small errors by leaseholders leading to lengthy and costly technical arguments about whether the process has been carried out correctly;
- uncertainty as to the extent of the obligations that transfer to an RTM company, particularly in relation property such as gardens and carparks which is shared with other buildings; and
- the RTM company bearing the landlord’s costs in the leadup to acquisition (including litigation costs in some circumstances).
The CMA estimated that there were only 4,000 RTM companies in 2014, with the figure likely to have increased to 6,000 since, out of roughly 4 million leasehold properties. The problems referred to above may be to blame for the limited uptake of this right.
What do we propose?
Our provisional proposals include:
- relaxing the qualifying criteria, so that leasehold houses, and buildings with more than 25% non-residential space, could qualify for the RTM
- permitting multi-building RTM on estates
- reducing the number of notices that leaseholders must serve, and giving the tribunal the power to waive procedural mistakes
- setting out clearer rules for the transfer of information about management functions, and for the management of property which is not exclusive to the premises claiming the RTM
- requiring each party to bear its own costs of any tribunal action, and exploring options for the landlord’s non-litigation costs
We will be holding a number of consultation events across England and Wales. At these events, we will discuss some of our proposals and ask for your views. We encourage all those interested in the RTM to attend these events and help shape our final recommendations for reform.
Our consultation events are being held jointly with the Commonhold project team (you will have the opportunity to choose to come to either the RTM session, the commonhold session, or both). Details of our consultation events are available on the Commonhold project webpage.
The consultation closed on 30 April 2019. We intend to publish our final report in Spring 2020.
By email to: email@example.com
Area of law
Property, family and trust law
Commercial and Common Law team