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 statutory provisions could be interpreted to mean that the right to manage applies on a block-by-block basis – and this would appear to be how the Government construes the legislation: see http://www.theyworkforyou.com/whall/?id=2013-12-04a.323.0 However, anecdotal evidence suggests that numerous right to manage companies have been established on an estate-wide basis to manage multiple self-contained buildings and, in Gala Unity Ltd v Ariadne Road RTM Co Ltd [2012] EWCA Civ 1372, the legitimacy of such an arrangement was not even questioned.
Ninety Broomfield Road RTM Company Ltd v Triplerose Ltd [2013] UKUT 606 (LC); [2014] PLSCS 4 appeared to confirm that it is possible for a right to manage company to acquire the right to manage two or more buildings. However, the issue has come under the spotlight again in Fencott Ltd v Lyttelton Court 1 14-34a RTM Company Ltd [2014] UKUT 27 (LC).
The tribunal acknowledged that the existence of an estate-wide right to manage company could prevent tenants of individual blocks from forming their own block-specific right to manage companies, because section 73(4) of the 2002 Act prevents a company from being a right to manage company in relation to premises if such a company already exists in relation to the same property. However, the tribunal ruled that this was no more of a disability than the disability inflicted on tenants of a self-contained part of a building who find that a right to manage company has been formed, whose objects are the acquisition of the right to manage the whole of the building.
The Deputy President of the tribunal observed that there are estates where an estate right to manage is necessary to enable the right to be enjoyed at all – or at least to be enjoyed effectively. Where otherwise separate buildings receive services through inseparable communal installations, or where truly self-contained buildings share appurtenances (such as car parks, gardens or access roads), effective self-management is likely to require that control be vested in a single body. The Deputy President noted the potential for discord, duplication of effort and wasted expenditure where multiple companies are forced to collaborate – and agreed that the decision in Ninety Broomfield Road provided a simple, pragmatic and attractive solution to a difficult problem.
However, Ninety Broomfield Road had established that the qualifying criteria must be satisfied in relation to each self-contained building. Therefore, any suggested dilution of the freedom to manage as a result of the establishment of an estate right to manage company would be the consequence of the voluntary decision of the tenants in each self-contained building on an estate who chose to participate in the right to manage.
Allyson Colby is a property law consultant
