Leaseholders and the sector react to Law Commission reforms to commonhold and right to manage

There is bound to be a contrast between successful professionals in the leasehold sector discussing reforms, and the reactions of more emotive leaseholders who see themselves as the victims of its injustices.

Examples of both were evident on Tuesday at the Law Commission’s symposium at London University’s law faculty.

Consultation on the proposals to reform both commonhold title and right to manage are now open to all.

Reinvigorating commonhold consultation closes on 10 March 2019:

Commonhold

Initiation Pre-consultation Consultation Policy development Reported Initiation: Could include discussing scope and terms of reference with lead Government Department Pre-consultation: Could include approaching interest groups and specialists, producing scoping and issues papers, finalising terms of project Consultation: Likely to include consultation events and paper, making provisional proposals for comment Policy development: Will include analysis of consultation responses.

Right to manage is out to consultation until 30 April 2019

Right to Manage

Initiation Pre-consultation Consultation Policy development Reported Initiation: Could include discussing scope and terms of reference with lead Government Department Pre-consultation: Could include approaching interest groups and specialists, producing scoping and issues papers, finalising terms of project Consultation: Likely to include consultation events and paper, making provisional proposals for comment Policy development: Will include analysis of consultation responses.

At a daytime event for leasehold sector professionals, pro-leaseholder speakers such as Martin Boyd and Sebastian O’Kelly, of LKP, and Shula Rich, gave their views on the reforms to an audience that hardly welcomes them.

But they were listened to politely, and the questions afterwards followed the accepted norms.

Unfortunately, in the evening leaseholder session Law Commissioners Professor Nicholas Hopkins and Stephen Lewis faced a handful of leaseholders determined to air their grievances no matter what the particular subject was under discussion.

This was rather less useful than the initiative last autumn of LKP in ensuring that directors of RTMs and RMCs of prime London blocks, worth well over £1 billion, met the Law Commission.

The aim was to demonstrate that leaseholders are perfectly capable of running their own affairs.

In vain did Professor Hopkins tell the 200 audience that the panel were “just a bunch of lawyers” and had no authority to consider every aspect of leasehold.

The Law Commission has repeatedly expressed regret that it is tasked with reforms to enfranchisement, commonhold and right to manage. It would welcome a reform of the entirety of leasehold law and supports the need for it. But that’s not what the Law Commission has been tasked to do.

What the Law Commission made of one particular leaseholder, with an obsessive dislike of commonhold – which is, in fact, on the statute book – is anyone’s guess. The audience soon expressed its exasperation with such self-indulgence.

Another leaseholder won applause for equating leasehold with “slavery”, and asked the Law Commission to make commonhold compulsory.

Some of the audience had direct experience of commonhold in Europe or elsewhere, and so could contrast it with their experiences of owning flats as a tenancy in London.

At the earlier symposium, Martin Boyd, the LKP chair, urged the adoption of commonhold, a form of property tenure near universal in the rest of the world.

Mr Boyd is directly responsible for the revived interest in commonhold, having chaired the All Party Parliamentary Group meetings to consider it. Without his efforts, the Law Commission’s consultation to make it work would never have begun.

LKP and the APPG have hosted experts from Australia, which abandoned leasehold for strata commonhold title from the early 1960s.

He has ensured that Australian experts in strata title have informed MPs

For first time in 14 years, Westminster hears more of commonhold

Professor James Driscoll, LKP trustee and a former property judge, also spoke in favour of this form of property tenure, about which he wrote a book before commonhold came onto the statute book in 2002.

Freehold speculators obviously loathe this means of empowering the owners of flats, but even the professional audience was not unanimously hostile to it.

Nigel Glen, chief executive of the Association of Residential Managing Agents, spoke at the meeting, repeating in shorter form his measured and balanced analysis of leasehold and commonhold that he had given to the Communities Select Committee in January.

Mr Glen also spoke against the notion of compulsory education of RTM directors in property law and management on libertarian grounds.

This probably impractical notion is being pondered by the Law Commission as a means of addressing freeholders complaints that leaseholders interests are only short term and concerned with reducing costs.

Shula Rich argued for equivalence: making the pointed observation that if leaseholder RTM directors are to be bullied into being educated, then so should the property punters who pick up a freehold in the auctions.

Right to Manage was the other major topic under consideration.

Sebastian O’Kelly, LKP chief executive, regretted that right to manage was necessary: it should be the norm for all blocks of flats to be built with residents’ management companies.

He praised the Law Commission “for acknowledging that it would far prefer not to be tinkering about with the laws of right to manage, enfranchisement or the still theoretical issues around commonhold, but instead reform the whole of the leasehold system”.

“I approve very much its partial agenda: its remit is to make matters easier, simpler and more cost effective for leaseholders.

“Not freeholders, who have had some success with government in posing as the long-term custodians of a building – for which they never pay to maintain and which, to acquire, perhaps cost a full 3% of the collective value of the leases.”

Mr O’Kelly welcomed the Law Commission’s proposal that the bar on RTM in mixed use sites with more than 25% commercial be removed – with the proviso that the RTM company appoints a professional property manager.

Also, that shared ownership leaseholders be included in right to manage, because “there is nothing shared about this form of ownership when it comes to paying the service charges”.

Regarding multi-block RTMs, he said: “The Triplerose decision on multi-block was a disaster for right to manage and leaseholder empowerment. It is good that the Law Commission is thoughtfully addressing this, while allowing smaller associated blocks to break away if need be to form a separate RTM.”

Related posts:

Law Commission seminars on commonhold and RTM launched Enfranchisement, commonhold and managing agent regulation are first up for the Law Commission ‘The time is right for commonhold,’ announces Law Commission. (Pity the government doesn’t agree …) Lawyers to Communities Select Committee: Stop ‘sticking plaster reforms’. End ‘draconian’ forfeiture. £10 ground rents a ‘mistake’. Make legal costs fair to leaseholders. Commonhold failed because developers make money out of leasehold … Housebuilders WILL benefit from commonhold, Hopton Build developer tells Law Commission