Right to Manage/Collective Enfranchisement

Right to Manage

Being dissatisfied with a landlord or managing agent is not uncommon among leasehold property owners – but even leaseholders who are not dissatisfied may consider making a claim against the landlord for the right to manage (RTM) the building their property is in.

Leaseholders who manage their own block no longer have to pay a Service Charge to their landlord – including expensive and sometimes unjustifiable administration fees; and also can arrange their own insurances and maintenance contracts.

Leasehold tenants now have a right under the Commonhold and Leasehold Reform Act 2002 to apply to manage the building they live in themselves.

There are, however, stringent criteria for being able to exercise a right to manage a leasehold property, including:

• The building must be at least partly self-contained
• Commercial leaseholders must not comprise more than 50% of the building
• Commercial leaseholders must not occupy more than 25% of floor space in the building
• The RTM management company must comprise at least 50% of the residential leaseholders
• Leaseholders must have occupied their flats for at least 21 years to be qualifying tenants for RTM – and at least two qualifying tenants (QTs) must participate, with at least two-thirds of flats let to QTs (ie two-thirds of flats must have leases longer than 21 years)
• RTM cannot take place if the landlord is a resident.

Right to manage involves setting up an RTM management company and serving a Section 78 notice on all leaseholders of the building, as well as a Section 79 Notice on the landlord and all other parties, such as managing agents.

The landlord can serve a counter notice – and either admits or disputes the claim.

After the required notices have been served, there is a further complex procedure with set time limits before an RTM can take over management of a building – and in some cases, tenants may even fail to do this if the landlord opposes the right to manage claim.

Because of the complexities and legal process involved in RTM, it is vital to seek expert legal help from a specialist property solicitor to ensure the success of a right to manage claim or in defending an RTM claims from tenants.

LAWTEC Solicitors can advise both tenants and landlords on right to manage claims and will be able to guide you through the process and protect your interests at every stage.

Collective Enfranchisement

Collective enfranchisement under the Leasehold Reform Act enables a group of leaseholders to buy the freehold of a property from their landlord.

The advantages to this not only involve not having to pay high Service Charge fees to a landlord – but also being able to grant an extension of the lease to leaseholders of the flats.

Collective enfranchisement also enables leaseholders to review existing leases and make changes.

The eligibility criteria for collective enfranchisement are similar to RTM, but residential properties must comprise more than 25% of the property.

If the landlord is resident in a block with fewer than four flats, this may also be prohibitive – and any leaseholder who owns more than three flats in the same building is not able to participate.

Because of the complexities involved in collective enfranchise, it is advisable to contact an expert property solicitor who can assess the eligibility of leaseholders to apply for collective enfranchisement.

LAWTEC Solicitors can advise both landlords and tenants on collective enfranchisement under the Commonhold and Leasehold Reform Act 2002.

LAWTEC Solicitors

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