A recent breach of lease application to both the First-tier Tribunal and Upper Tribunal by a Right to Manage Company has been struck out on both occasions. In this article, we look into why this happened and provide some key takeaways.
Background to Eastpoint Block A RTM Company Ltd v Otubaga
In October 2021 Eastpoint Block A RTM Company Ltd, an RTM company, applied to the First-tier Tribunal (FTT) in relation to two lease breaches by Mr Otubaga, one of the leaseholders within the block, under section 168(4) of the Commonhold and Leasehold Reform Act 2002. They believed Mr Otubaga was subletting his flat and that the subtenant was running a business from the flat. Additionally, the business activities were causing a nuisance to other leaseholders and occupiers within the block.
The RTM Co’s intention at this stage was to forfeit the lease due to the apparent breaches, but in order to do so it would need either an admission of the breach by the leaseholder or a determination by the Court/ Tribunal that the breach exists. Following this, they would need to gain a forfeiture order, and if obtained, could then repossess the flat.
The FTT decision
The application was dismissed by the FTT on the grounds that it had no jurisdiction. This was due to the RTM Co not being ‘the landlord’ as section 168(4) of the Commonhold and Leasehold Reform Act 2002 states “A landlord under a long lease of a dwelling may make an application to the appropriate tribunal for a determination that a breach of covenant or condition in the lease has occurred.” The FTT could therefore not deal with the matter.
The RTM Co believed that as it had taken over the manageent of the building, and this was a management matter, it was therefore ‘the landlord’ for these purposes. This led to them appealing the decision and it moved to the Upper Tribunal (UT).
The UT decision
Following the appeal, in November 2022 the UT upheld the FTT decision, stating that only a landlord could forfeit a lease. Therefore, the RTM Co wasn’t in a position to utilise section 168(4) to obtain a decision upon whether a breach of lease had taken place for repossession purposes.
The key takeaway from this case is that an RTM Co has a limited remit, with the authority to manage the day-to-day activities at the bock and “stands in the shoes” of the landlord for service charge purposes. However, it is not the landlord, and therefore does not have the right to make an application under section 168(4). Managing Agents working with RTM Co’s should consider their options when dealing with disruptive leaseholders and ensuring effective block management.