RTM Reforms – Relief Due For Dissatisfied Leaseholders But Not Until 2020.
If you’re one of the estimated four million (at least) who leasehold a property in England, you are more than likely to welcome the recent Law Commission proposals to reform control over block management. Dissatisfaction among leaseholders about the day-to-day management of their building is nothing new of course. Lawful entitlement to obtaining control can be an ever bigger challenge…
The Right To Manage (RTM) Act, introduced in 2002, aims to provide a straightforward mechanism for leaseholders to take over the management of their property from the landlord as quickly and smoothly as possible. As a “no-fault” right, leaseholders are able to gain control without having to prove landlord mismanagement. Once the transfer is completed, from then on, it would be the leaseholder rather than their landlord who has direct responsibility for managing services, repairs, maintenance and insurance.
Unfortunately, in some hands, the process of acquiring RTM may not necessarily be so pain free, and an increasing number of leaseholders have met considerable difficulties in gaining control of the building. It is repeatedly heard that freeholders are frequently obstructing leaseholders from simply trying to exercise their right to manage.
A recent government consultation on unfair leasehold practices returned more than 6,000 replies, in which, the overwhelming majority expressed their concerns about buying and living in a leasehold property. It’s clear that even within the limits of the consultation numbers, there is building up beneath the surface an undertow of leaseholder discontent that needs to be properly addressed.
Leaseholder-formed RTM companies report that the process involved in trying to obtain a full and clear RTM mandate can be limited, too expensive, overly complex, slow and ill-defined. Key issues centre around excessive landlord costs, delays caused by tiny errors in complying with procedure and in receiving vital information. There have been problems with not knowing the extent of newly acquired management responsibilities, most particularly, over shared property such as gardens and car parks.
Current restrictions imposed on leaseholders
Undoubtedly, one of the biggest issues is the current restrictions imposed on leaseholders. The Law Commission has set out proposals intended to extend the qualifying criteria for RTM beyond flats to now also include leasehold houses, permit multi-block RTM on estates and remove the 25 per cent commercial space restriction. Further reforms are designed to make the process more accessible, quicker, easier and less confusing.
The aim is to have a reduced number of notices that leaseholders must serve as part of the claim process. Deadlines are to be introduced for all procedures, and the exchange of information between landlord and RTM company, to prevent prolonged delays stalling the entire process. Any RTM disputes can be quickly resolved by a tribunal and minor procedure errors in the application waived. Provision is also to be made for exploring options to improving the overall procedure costs.
Two thirds of all reports have been accepted
It was only in December 2017 that the Law Commission announced it would be looking into residential leasehold and commonhold reform. Then nearly one year later in September 2018 it was asked by Government to prioritise enfranchisement solutions for existing leaseholders of houses. The consultation paper just released 7th February 2019 is due to close three months later on 30th April. However the Law Commissioner, Professor Nicholas Hopkins, indicates that early leasehold reform is unlikely to take place before 2020, adding there will be no Leasehold Reform Act 2019.
However, there is no reason why dissatisfied leaseholders should not continue to prepare for reform. Reaching out to the right expert, experienced agents can help to put in place the most efficient and pain-free of handovers. It should be borne in mind that ever since the Law Commission was set up by Parliament in 1965, more than two thirds of all reports have been accepted or implemented in whole or in part.