The right to manage provisions in the Commonhold and Leasehold Reform Act 2002 enable leaseholders to assume responsibility for the day-to-day management of the blocks of flats in which they live, without proving that their landlord is at fault. Premises fall within the ambit of the scheme if they consist of “a self-contained building or part of a building”, with or without appurtenant property.
The issue that arose in the consolidated proceedings in Ninety Broomfield Road RTM Company Ltd v Triplerose Ltd [2013] UKUT 606 (LC) was whether the right to manage companies can acquire the right to manage more than one self-contained building. If so, should the companies have served separate notices in respect of each qualifying building and did each building need to have the requisite number of qualifying tenants who were members of the company?
The landlords noted that the legislation refers to “a” building and argued that this meant that the right to manage applies to a single building or part of a building. They referred to one of the leading textbooks on this topic, which supported their interpretation, and suggested that there were good policy reasons for construing the legislation in this way. If the right to manage were to apply to multiple buildings, this could lead to potential conflicts of interest between the leaseholders of different blocks and the power of the leaseholders’ votes would be diminished.
The tenants pointed to instances in which a right to manage company had assumed managerial control of multiple premises and relied, in particular, on Gala Unity Ltd v Ariadne Road RTM Co Ltd [2012] EWCA Civ 1372 (although the legitimacy of the arrangement was not an issue in that case) and 41-60 Albert Palace Mansions (Freehold) Ltd v Craftrule Ltd [2011] EWCA Civ 185; [2011] PLSCS 61, which confirmed that it is possible for a right to manage company to acquire the right to manage more than one self-contained part of a building. They also highlighted the complications that would arise, for both landlords and the companies concerned, if separate right to manage companies were to try to manage different blocks of flats with shared facilities and common parts.
The Upper Tribunal took the purpose behind the legislation as its guide. It agreed that section 72 refers to “a” building, but decided that the section describes the type of building, and does not limit the number of buildings or parts of buildings, to which the statute applies. It accepted that there may be tensions on estates with shared facilities, but took comfort from the fact that leaseholders can challenge their liability to pay and the reasonableness of service charges in the courts.
Therefore, there was nothing to prevent a company from acquiring the right to manage more than one building. The tribunal ruled that qualification must be achieved on a block by block basis, but that a single notice will suffice in respect of all the blocks. However, its content must be sufficiently clear to establish eligibility in respect of each building. Consequently, it suggested that right to manage companies might wish to serve separate notices, for clarity.
The decision adds to the growing collection of authorities on the right to manage and establishes that the right is more flexible than many had believed.
Allyson Colby is a property law consultant
