A right-to-manage company is not a “landlord”, accordingly, it cannot apply to the First-tier Tribunal for a determination under section 168(4) of the Commonhold and Leasehold Reform Act 2002 that a breach of covenant or condition has occurred. This was the determination of the Upper Tribunal (Lands Chamber) in Eastpoint Block A RTM Company Ltd v Otubaga [2022] UKUT 319 (LC); [2022] PLSCS 196.
Under sections 168(1) and 168(2), a landlord cannot serve a notice under section 146(1) of the Law of Property Act 1925 to forfeit a long lease of a dwelling for a breach of covenant unless the tenant has admitted the breach or the same has been determined on an application under section 168(4) of the 2002 Act. It is clear from section 168(4) that the person who must make such an application is the “landlord”.
The appellant RTM company acquired the right to manage Pointer Close, a block of flats in Thamesmead, SE22. The respondent was the long leaseholder of a flat within the block.
In October 2021, the RTM company applied to the FTT for a determination under section 168(4) that the lessee was in breach of covenant of the terms of his lease by carrying out a business from his flat and by permitting his subtenant to cause a nuisance. In March 2022, the FTT struck out the application on the basis that it did not have jurisdiction to consider it. The FTT found that the procedure under section 168(4) was a not about enforcing covenants in a lease but was a precondition of forfeiture. Under section 100(3), an RTM company cannot exercise any right of re-entry or forfeiture.
In upholding the decision of the FTT, but on differing grounds, the UT found that only a landlord could make an application under section 168(4). An RTM company was not a landlord for the purposes of that section. Further, only a landlord could forfeit a lease.
The UT observed that when an RTM company acquired the right to manage, it did not become a landlord. Chapter 1 of the 2002 Act did not operate to vest the reversion to the leases or any other property rights to the RTM company. Acquiring the right to manage only conferred on the right to manage company a limited set of “functions” and the rights and obligations that went with them. Those “functions” were in respect of services, repairs maintenance, improvements, insurance and management: sections 96(5) and 96(6).
Although it was correct that an RTM company was required to monitor and report on a lessee’s non-compliance with its covenants under section 101, there was no requirement on the RTM company to take action. Any enforcement action that was required to be taken that related to forfeiture or re-entry could only be taken by the landlord.
Elizabeth Dwomoh is a barrister at Lamb Chambers
