Despite the clarity of the judgment in this recent Court of Appeal case, RTM companies and leaseholders have been left with more questions than answers after it was ruled that an RTM co can only acquire the right to manage one self-contained block or building.
The Broomfield Road case concerned whether or not a single RTM company can have the right to manage more than one block and the ruling seems clear: an RTM company may not, on the face of it, manage more than one self-contained block or building. Brady Solicitors Right to Manage experts explain.
One block rule
The right to manage therefore now only applies to a single block, or self-contained part of a block, and not to a number of blocks – whether these blocks are located on the same estate or in completely different geographical locations.
This ruling won’t affect you if you are considering exercising the right to manage a single block.
For estates with multiple blocks – regardless of their similarity or physical proximity – each block must now make a separate claim for the right to manage and set up its own RTM company. For developments with more than one block, this will clearly make the RTM process more difficult and more expensive.
Where individual RTM companies do acquire the right to manage on an estate with multiple blocks, there is potentially a practical solution to the on-going management. Each individual RTM company can delegate management to a third party managing agent or by nominating one of the RTM companies to take the lead role. This would at least make the ongoing management process a little more straightforward, assuming agreement can be reached between the parties!
What about current RTM claims concerning multiple blocks?
For multi-block RTM claims that are part-way through the process, the ruling will clearly give an easier defence to a freeholder who wants to challenge the RTM process. The facts will of course vary from case to case (a typically lawyerly answer you may say) but, on the face of it, the odds are stacked in favour of the freeholder.
If you are involved with a multi-block RTM claim that is due to be heard by the Tribunal then you need to consider your position carefully. Contact us if you need some urgent advice on a current multi-block RTM claim.
Confused? You are not alone..
As you would expect, the Brady Solicitors phone lines have been busy with clients seeking answers to how the Broomfield ruling will affect their past, current and future right to manage plans.
We have set out some of these questions below and will be preparing a briefing paper to provide you with answers.
To add your question for consideration or to register for an advance copy of this report please get in touch.
Questions raised by the 90 Broomfield Road case
- I am a member of an existing RTM company that manages all three blocks on our site. How does this decision affect our right to manage?
- It sounds like it will now be more difficult for myself and fellow leaseholders to claim the right to manage – is this true?
- How do we determine whether the units on our development are to be treated as one self-contained unit or as separate buildings?
- Will acquiring the right to manage become more expensive?
- Who is responsible for managing and maintaining the outdoor communal areas on our development that are shared by multiple blocks?
- I am a leaseholder on a large development with 10 blocks. Does this mean 10 different RTM companies with ten boards of directors, 10 sets of meetings to consider ten sets of issues for every item that impacts on the site?
- With potentially a number of managing agents running different blocks on a site, how can we avoid a cross-charging situation?
- An RTM company won the right to manage my multi-block site some time ago. Can I now get that decision reversed?
- If there is a garage or a garden shed somewhere on site does that rule out RTM as an option for me and my fellow leaseholders?
Our advice in the meantime?
This ruling most definitely does not mean the end of right to manage; it only affects estates with multiple self-contained blocks and RTM will remain a viable option for leaseholders in single blocks to take control over how their properties are managed. For estates with multiple blocks it will however need a considered and practical approach.
