Property Law uk

Maintained by Gary Webber

Right to manage

Introduction

A right to manage was given to long leaseholders by ss71 to 113 of the Commonhold and Leasehold Reform Act 2002. The basic concept is that if half or more the qualifying tenants want to take over the management of the property they are able to do so without the need to show any fault on the part of the landlord. The property will be managed by the tenants through the vehicle of a Right to Manage Company (RTM). So long as the procedural requirements are complied with the landlord cannot object and is not entitled to any compensation. However, it is only the right to manage that is acquired; not the property itself.


Procedure

Substantial compliance

Elim Court RTM v Avon Freeholds Ltd
[2017] EWCA Civ 89

Summary

In five conjoined appeals the Court of Appeal considered whether there had been a failure to comply with the statutory procedural provisions and the consequences that followed. It held that the principle of substantial compliance had no relevance in the context of the RTM legislation.

Issues

The facts of each case were slightly different but together they raised the following issues:
  • Whether a notice inviting participation is required by s78(5)(b) of the 2002 Act to inform non-participating tenants that the RTM company's articles of association are available for inspection on 3 days at least one of which must be a Saturday or Sunday. If so, whether the consequence of non-compliance with the requirement is fatal.
  • Whether the disputed claim notices purported to be signed by a company and, if they did, whether that signature was ineffective for failing to comply with s44 of the Companies Act 2006. If so, whether the notice was nonetheless a good notice.
  • Whether the claim notice (at Elim Court) was served on the intermediate landlord. If not, whether service on the intermediate landlord was required. If it was, whether the failure to serve the intermediate landlord was fatal.
Decision of the Upper Tribunal
  • The notice failed to comply with the statutory provisions and this was fatal. It was an important part of the statutory scheme that the articles of the RTM should be available for inspection on at least one weekend day.
  • The notices were validly signed.
  • The claim notice had not been served on the intermediate landlord, which was fatal to the claim. The case was appealed to the Court of Appeal.
Decision on appeal

The Court of Appeal allowed the appeal. The Court applied the principles set out in Natt v Osman [2014] EWCA 1520 Civ. The principle of substantial compliance had no relevance in the context of the RTM legislation. The question was one of statutory construction and what can fairly be supposed by Parliament to be the consequence of non-compliance.

It could not be supposed that Parliament had intended that a failure to specify a Saturday or Sunday for inspection of the company’s articles would invalidate the claim.

In relation to the signature issue the Court of Appeal upheld the reasoning of the Upper Tribunal.

In relation to the intermediate landlord issue the Court of Appeal held that failure to serve a single intermediate landlord, in circumstances where that landlord had no management responsibilities, did not invalidate the notice. It was not part of the purpose of the legislation that a mistake of that kind should invalidate the claim.


Service of claim notice by email

On the qualifying tenant

Assethold Ltd v 110 Boulevard RTM Co Ltd
[2017] UKUT 316 (LC)

Summary

A copy of a claim notice in respect of the right to manage procedure under the Commonhold and Leasehold Reform Act 2002 could be served validly by email on the qualifying tenants by the RTM company.

More detail

Section 79 of the Commonhold and Leasehold Reform Act 2002 contains the following provisions:

“(6) The claim notice must be given to each person who on the relevant date is--
(a) landlord under a lease of the whole or any part of the premises, …
(8) A copy of the claim notice must be given to each person who on the relevant date is the qualifying tenant of a flat contained in the premises.…”

The Upper Tribunal upheld the FTT’s decision that service by email complied with s79(8). It was held that the requirements of s.79(6) and s.79(8) are distinct. The RTM Company must give the actual claim notice to the landlord but only a copy of the claim notice to the qualifying tenants.


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