Right to manage reforms announced … days after Chelsea Bridge Wharf wins RTM

Housing minister Matthew Pennycook has advanced the timetable of the right to manage elements of the leasehold reforms today – days after Chelsea Bridge Wharf was conceded RTM by prime housebuilder the Berkeley Group.

Leaseholders win control of 1,132-flat Chelsea Bridge Wharf … which means they also manage the HQ of housebuilder the Berkeley Group

The reforms – secondary legislation to the 2024 Leasehold and Freehold Reform Act – come into effect on 3 March.

It means that sites where the commercial element of a building is more than 25% but does not exceed 50% can now go right to manage.

This reform has long been urged by the Leasehold Knowledge Partnership, which arranged for directors of RTMs to gather at the Law Commission seven years ago. It was its report on which the measure is based.

In addition, the reforms mean landlords won’t be able to pile on legal fees to frustrate RTM applications, which is how so many RTM applications get derailed usually after lawyers raise a succession of trifling issues.

The worst example of the risks involved in legal costs in RTM concerned retirement site Elim Court in Plymouth, where the RTM went to the Court of Appeal.

Fortunately, the leaseholders won their application, but had they lost all the residents in the site would have faced wipe-out legal fees – including flat-owners who were not part of the action or who had moved in after it had already begun.

An RTM application should never have got anywhere near the Court of Appeal:

Israel Moskovitz loses epic Elim Court right to manage battle in landmark Court of Appeal decision

LKP welcomed the Law Commission report in January 2019, in a report that also lists some of the most egregious RTM disputes:

No.1 Deansgate wins epic RTM battle, as freeholder throws in the towel at the Court of Appeal

Six years ago, I wrote this:

“For years commercialisers in the leasehold sector have run rings around this legislation, either thwarting leaseholders efforts to gain control of the management – and money – in their buildings; or wasting a lot of time with meritless delays.

“The most pedantic and abstruse arguments have been deployed to derail right to manage, sadly with some success as a credulous property tribunal has bent over backwards to accommodate silly challenges to leaseholders’ Parliament-granted rights.

“It has become a cottage industry, with legal professionals dreaming up convoluted impediments to right to manage.

“The court record of these cases shows the aggressive determination of monetisers in the sector – often hiding behind nominee directors or based offshore – to keep control over the management of blocks of apartments.

“As they are not supposed to be profiting from this – ground rents are the only legitimate annual income stream under the lease – one has to question why they are doing it.

“Of course, owning the freehold to a block and controlling the management is a licence to print money and abuse power. This is why right to manage was introduced.”