Court Urges Simplification of ‘Right to Manage’ Rules

As a recent case shows, whilst there is legislation which, in certain circumstances, allows leaseholders to obtain the right to manage the buildings they occupy, the process is replete with traps and it makes sense to proceed in such cases only with the advice of an expert property lawyer.

The case concerned a ‘right to manage’ company that had been formed with a view to taking over the management of a block of 40 flats. Pursuant to procedures laid down by the Commonhold and Leasehold Reform Act 2002, the company had served notices on qualifying tenants inviting them to participate in the process.

The freeholder of the building wished to resist the transfer of the management to the tenants’ company and pointed to procedural flaws in the notices. Tenants had not been offered facilities to inspect the company’s articles of association on a Saturday or a Sunday and no notice had been served on an intermediate landlord of one of the flats which was subtenanted. Those arguments prevailed before the Upper Tribunal and the company’s bid to take over management of the property was thwarted.

In upholding the company’s appeal against that ruling, however, the Court of Appeal found that the notices were not invalidated by shortcomings that were purely procedural. The Court noted the melancholy fact that whenever Parliament lays down a detailed procedure for exercising a statutory right, people commonly get the procedure wrong.

This was the third time that the company had sought to take over the management of the block and the Court urged the Government to simplify the procedures in order to reduce the potential for challenge by obstructive landlords. Otherwise, objections based on technical points of no significant consequence would continue to bedevil the acquisition of the right to manage.