It is not unusual for residential estates to be built containing more than one block of flats, with the individual flats being sold on long leases. The leaseholders in the blocks will probably share rights over any communal areas, such as access ways, gardens or possibly parking spaces. These and other rights concerning the estate will (or should) be referred to in the leases of the flats concerned.
Take a case where there are two blocks of flats and the leaseholders in the blocks are considering taking over the management by exercising the statutory right to manage (“RTM”). Under the RTM the participating leaseholders must have an RTM company incorporated to make the claim under Part 2 of the Commonhold and Leasehold Reform Act 2002.
Should these leaseholders join forces and form one RTM company? This may carry a number of practical advantages, such as having one company managing the whole of the estate rather than two.
This course was considered by the Court of Appeal in Gala Unity Ltd v Ariadne Road RTM Co Ltd [2012] EWCA Civ 1372; [2012] 3 EGLR 79 when it decided an issue relating to “appurtenant property” over which one RTM company formed to deal with two separate blocks of flats could manage. But there was no challenge to using one RTM company for more than one block.
A new decision of the Court of Appeal (TripleRose Ltd v Ninety Broomfield Road RTM Co Ltd [2015] EWCA Civ 282; [2015] PLSCS 109) deals specifically with this as a substantive issue. It concerned three appeals against decisions of the Upper Tribunal (Lands Chamber). In all of the claims, one RTM company was incorporated to take over management of more than one block of flats. In each case the landlord gave a counter-notice denying the claim. For example, in Broomfield there were two purpose-built structurally detached blocks of flats with parking spaces and other communal areas and a single access area. A single RTM company was incorporated and it gave two separate claims, one for each of the blocks.
Allowing the landlord’s appeals in all three of the cases, the court concluded that the language of the statute and its practical workings show that the RTM can only be used for one block of flats. In these three cases the companies formed could not validly exercise the RTM over more than one block.
The court (which referred to a government consultation paper and to some of the parliamentary debates) was influenced by what it saw as practical disadvantages if one such company could lawfully take over more than one block of flats. For example, if there is a larger group of leaseholders in one of the blocks, they could dominate the overall management of the estate to the detriment of the minority. The court concluded that one RTM company cannot acquire the right to manage more than one self-contained building.
James Driscoll is a writer and a solicitor
