Recognised Tenants’ Association review – Part III

In this section, we look at the results of an experimental test of the RTA SI to see how it might work in practice. We then go on to draw conclusions from all three papers.

A test of the RTA SI

We have been able to use the leaseholders at the Charter Quay (CQ) site to help run a test of the SI and are very grateful to them for their help. For those who are not aware of CQ, it is a development of 243 flats, 8 commercial units, a theatre and large public area by the river at Kingston-upon-Thames.

Some may assume this test of the SI would be slanted to provide a particular result, given the comments in our previous papers, however, we have tried to run the test impartially.

If it were argued the test somehow is partial we would ask: if a landlord is not keen on leaseholders becoming organised how impartial will they be?

In fact, after 5 years of court battles against the Tchenguiz group, it could be argued that the leaseholders at CQ have a better than average understanding of RTAs, and of the benefits of membership. So presumably they would be more keen to say yes to an RTA than most.

We were able to use CQ for the test because the results are not important to the site. They purchased their headlease, and then freehold, from the previous landlord and freeholder. Hence they already manage themselves and don’t need an RTA. However, respondents were asked to complete the survey as if they still had the Tchenguiz group as the landlord.

Before looking at the details of the survey it is worth highlighting some processes, which operate on any site, which affect the accuracy of its records. No large site has perfect data for various reasons, however, at CQ there are no disincentives for people to keep their information up to date. Because this site is owned by the leaseholders, they are happier to trust the management company and the managing agent with their data.

Over the years CQ has built up a fairly complete and accurate set of records showing the proportion of leaseholders who can be contacted electronically. It breaks down as follows:

• For each mailing, we have about 2-4% of email addresses which are either not working or have been changed.
• Another 2-4% of flats will be in transition with people moving in and out.
• For each mailing, they used to get a 65% opening rate many years ago but not have an almost consistent opening rate of 70-80%. This figure is likely to be higher than that on other sites due to the particular nature of the site as described above.
• It is never the same 20-30% who do not open. People will presumably be away on occasions or simply miss individual emails.
• Those who get postal letters instead of emails also have a response rate at similar levels.
• CQ then have a fairly consistent rate of links within the email being opened to a document. In this test we included two links. One of those links was to the RTA survey. That click rate is normally in the region of 40-60%. So far this emailing has a 56% opening rate.

In order to achieve a favourable result of 50% or more in order to form this theoretical RTA the basic mechanics of getting to that point is problematic.

The total likely responses, which is also the theoretical maximum number of “Yes” votes = (total leaseholders) x (available functioning contact addresses) x (opening rate) x (linked document access rate)

For CQ the theoretical maximum number of “Yes” votes = 100% x 97% x 75% x 50% = 36% of all the leaseholders. So, even if all respondents vote in favour, the 50% threshold is unlikely to be reached in a single email.

The RTA SI mandates that only one contact attempt may be made within a 4 month period. This is a problem because the best-proven way to get additional responses is to use several emails.

The total likely responses of 36% are then forwarded to the Residents’ Group. The resident’s group would then have to contact that subgroup of leaseholder to ask if they wish to join a potential RTA and that mailing would face the same sort of mechanical loses set out above.

The test results

• 90% of respondents as the start of the survey said they would be interested in joining a residents group.
• That number drops to 70% when asked if they would be interested in joining a tenants group.
• 72% said they had some idea or were certain on the difference between a residents and tenants group. However, some of those who said they did know the difference still said they would not join a tenants group.
• 80% of respondents expressed concern about the fact that the SI allows the landlord to decide what is written to the leaseholders to ask them to join a residents group.
• 70% said they were happy for the landlord to pass on their email address but a much lower percentage were happy to let the landlord pass on their contact address and phone numbers.
• 30% said they would not be happy for the landlord to be involved with sending any of their details.
• 60% of those who let their flats would object if the landlord could ask them for details about their subletting (this problem was highlighted in one of the MHCLG consultations).
• 50% said they felt the 4-month deadline would cause problems and a further 34% said it may cause problems.
• 78% said they would object to being told that their details need to be “available for public inspection”.
• Only 20% of respondents at the end of the survey said they would still be keen to join an RTA, while 80% now said they would either not join or would think about not joining.
• 0% said they felt the new rules seemed very sensible.
• 90% suggested they felt the rules were in the range of neither helpful or unhelpful to totally illogical and unhelpful
• 35% said they felt the new rules totally illogical.

If the test is even remotely accurate is suggests the new rules could mean there is very limited chance for larger sites of reaching the RTA SI 50% threshold.

We have a real-life example of how difficult it is to get responses, even in an emergency. At Citiscape in Croydon, the leaseholders had just discovered they had cladding and were being taken to the Tribunal to face costs of up to £20,000 per flat. The main letter from the agent to the 96 flats providing the resident group details obtained just 16 responses. It’s not that the leaseholders were not keen to join a residents group, it’s just that people are busy. We all find it hard to remember to take the time to respond to all sorts of letters. We forget or we lose the correspondence.

We would not in any way suggest this single test is definitive, and there is also some chance that the responses were swayed to be more favourable to forming an RTA due to their past experience of the site.

Any landlord who wants to help leaseholders form an RTA will go beyond what the rules oblige them to do. The problem is there seems to be very little evidence showing that landlords want RTAs to be formed, despite their assertions that they are keen on working with residents groups.

The purpose of the SI had always been to stop the uncooperative landlords, of which there are many, from abusing the process. The test suggests that this objective has not been met. The survey is by no means exhaustive. Landlords will find many other ways to disrupt the process.

The experience at Charter Quay is that it took over 2 years to get to the right number of members to form an RTA under the old rules, and it took someone a large amount of their time contacting people around the world.  As sites become larger those problems get bigger. We are aware of few if any sites with more than 300 flats where they have been able to reach or maintain the numbers required for an RTA. Almost all large RTAs had been allowed at below the stated percentages under the old rules. Under the new rules, there is no discretion for the Tribunal.

Conclusions

Our view from our understanding of the consultation findings, the legal opinions, and the RTA SI test is that we believe the SI has fundamental flaws. It has been argued that, while an RTA is psychologically important, they are perhaps legally unimportant, as they have few real powers. The important issue is for leaseholders to be able to contact each other, so they can act collectively. The SI seems to make this harder not easier.

Allowing the landlord to decide what goes in the letter, and allowing the landlord 4 months within which to respond, seems to take away almost any chance of the leaseholders gaining traction. The landlord who wants to obstruct seems to have been given far too many options to disrupt. As the legal opinions make clear, the landlord also now has many more opportunities to dispute the validity of an existing RTA. An aggressive landlord will find it easy to burden an RTA with demands for information that will make it impossible to sustain the information requirements of the SI.

As the test indicates, getting 50% support on any issue on larger sites is very difficult. The SI mandates a 4-month cycle for a single communication. Landlords will inevitably point to the consultation’s statement that landlords are not expected to respond to every request to send a contact request message from a residents group. This makes it impossible to gain any momentum. Allowing landlords to decide what is said in the letter seems to offer a green light to any landlord wishing to set out the reasons why people would not want to join an RTA rather than the reasons why the leaseholders might argue that they should join.

Some of the logic in the consultation seems based on a view of technology that has not moved on from the 1980s. We have had Customer Relationship Management software for decades. It would take no more than a few hours for a landlord to design and email a letter and most of the replies would be back within a few weeks, not 4 months.  In 4 months any large site is unlikely to have the same leaseholders as they had as the start of the process, so we could end up with the leaseholders in a constant loop while the landlord disputes the accuracy of their records.

Although it is suggested these new rules bring the private and social sectors into line that is not the case. A Tenants and Residents Association in the social sector is likely to be supported with a much lower percentage of membership. Tower Hamlets advise they recognise a TRA if 10% of eligible members join.

Finally, we return to the logic which officials argued back in 2011 that, somehow for the sake of democracy, the majority of all leaseholders must join a residents group in the private sector before has any status. While it does seem perfectly logical that an RTM must be supported by 50% of the leaseholders, because it has the power to make decisions about how the site is run and how the money is spent, why do we need to same proportion to form a residents group which has no real power to spend anything other than its own membership fees? A school, filled with pushy parents, would be lucky if 10% of parents took part in their Parent Teacher Association and yet we do not seem to worry that they might somehow be undemocratic.

As well as the SI seeming not to work as Ministers intended it seems likely the SI could also cause difficulty for the work being undertaken by the Law Commision.

• On collective enfranchisement, the Law Commision is currently not tasked to review right of first refusal rules under the 1987 Act, the current rules mandate that leaseholders must combine together to make an officer in less than 60 days. Any landlord now seems likely to point to the SI as meaning they now only need to provide the details of leaseholders after 121 days.
• On RTM, landlords are now likely to point to the SI as superseding the 2002 Act right to ask for contact details of all leaseholders. Since all leaseholders must be contacted to invite them to join the RTM what will RTMs do when the landlord quotes the RTA SI rules?
• On commonhold, the Law Commision may reduce the percentage of leaseholders agreeing to convert a leasehold site to a commonhold one from 100% to 75% or 80%. Again any landlord seems likely to point out the limited rights to access leaseholder information under the SI as a way to prevent the leaseholders from obtaining details of their fellow tenants.

If we go back to the first government consultation in 2015 it sets out in section 11 (last paragraph on page 14) the government believed there was an assumed right for a residents group to be provided with leaseholder details. The government’s new view, as adopted in the SI, takes the reverse position. It now requires that permission must specifically be given by each leaseholder. This view seems to conflict with, the opinion of the barristers, the submission to the consultation by the ICO, other existing legislation, and prospective leasehold reform.

Related posts:

Recognised Tenants’ Association review – Part II Recognised Tenants’ Association review – Part I DCLG to reform recognised residents association rules Tower Hamlets Homes spends thousands to thwart recognised tenants’ association LKP and Bottomley at Number 10 to reverse flawed reform of recognised tenants’ associations