The Right to Manage (RTM) rules are set for simplification under Law Commission proposals announced on 28 January 2019. The reforms are welcome, but do they go far enough to tackle the ‘after the event’ challenges of a successful RTM application?
Colin Hussey, Director of legal property management specialists Brady Solicitors, explains the proposals and encourages the industry to engage with the consultation process.
Open until 30 April 2019, the Law Commission has launched a consultation to bring in a series of reforms making it easier and faster for leaseholders to exercise the Right to Manage and take control of how their development is managed.
Right to Manage (or RTM) is a popular option for leaseholders wanting more control over how their block is managed. The application process is, however, complex, easy to get wrong and, frequently, slow and expensive. Additionally, there is a clearly defined set of qualifying criteria that means many leaseholders are in a position where their development is not even eligible for a Right to Manage application.
The Government has recognised this in a set of proposals that seek to make the RTM application process easier and relax some of the qualification criteria.
The key proposals in the new Right to Manage consultation include:
- Applications can include leasehold houses as well as leasehold flats
- Applications can be made for multiple blocks
- RTMs to be allowed for developments where there is more than 25% commercial
- Paperwork to be streamlined – simplifying the number of Notices leaseholders must provide
- First-tier Tribunal to have the jurisdiction to waive minor procedural errors
- Sharing costs between the freeholder and the leaseholder
- Education and advice for RTM directors
Applying for the Right to Manage is, though, only part of the issue. Once it has been secured, and the RTM company set up, the directors can then face a series of challenges in managing the development.
Unless they subsequently acquire the freehold, RTM companies do not have the right of forfeiture, which can make tackling a disruptive leaseholder or recovering service charge arrears extremely difficult.
Cost clauses in the lease can also be an issue. RTM companies are often unable to recover legal costs because the lease contains a cost clause in favour of the freeholder and RTM companies wanting to self-manage can find that the lease only permits the management fee to be paid to a managing agent.
Brady Solicitors operates at the heart of the leasehold sector and we see first-hand the frustrations felt by leasehold property owners, who face poor management of their block or have no say over how their service charge is spent.
We welcome any steps to make it easier for leaseholders to take control over how their property is managed.
However, we would like to see the proposals go further and consider how the ‘after the event’ RTM legislation can be improved to support RTM companies with the practical challenges of block management.
We hope that leaseholders will take this opportunity to make their voices heard on how the RTM legislation can be improved both during the RTM application process, and after the event.
The consultation closes on 30 April 2019 and can be found here: www.lawcom.gov.uk/project/right-to-manage/
If you are a leaseholder considering exercising the Right to Manage, or a managing agent looking to grow through the RTM route, contact the leasehold law specialists at Brady Solicitors for a friendly and confidential conversation.
Need more information on Right to Manage? Head over to our free Leasehold Resource Centre and search ‘Right to Manage’.