The Right to Manage One Building at a Time

In a landmark decision, the Court of Appeal has declared that RTM companies can only acquire the right to manage one building at a time.

The Commonhold and Leasehold Reform Act 2002 provides leaseholders with a statutory right to join together as members of an RTM company and take over management of their building from the landlord or existing management company.

Under the legislation an RTM company is clearly able to acquire the right to manage a “self-contained building” provided that building meets certain qualifying criteria.

Until the Court of Appeal decision of Triplerose Ltd v 90 Broomfield Road RTM Co Ltd [2015] EWCA Civ 282, however, there had been uncertainty as to whether a single RTM company could acquire management of multiple qualifying self-contained buildings on the same estate in a single claim.

The case was a conjoined appeal of four cases from the Upper Tribunal. The RTM companies in these cases wished to acquire the right to manage multiple self-contained blocks of flats on an estate and the landlords opposed the applications on the basis that an RTM company could only acquire the management of a single building under the Act.

Prior to this decision the Leasehold Valuation Tribunal (now called the First-tier Tribunal (Property Chamber)) and the Upper Tribunal had decided that an RTM company could acquire the right to manage more than one self-contained building, provided each building met the qualifying criteria independently. Despite these earlier decisions the Court of Appeal nevertheless found that, in accordance with the wording used in the 2002 Act, an RTM company is limited to only acquiring management of a single self-contained building.

Part of the basis for the court’s decision was that the legislation does not appear to permit leaseholders from neighbouring buildings to be members of the same RTM company. Allowing membership of a single RTM company where buildings on an estate are of different sizes could create unfairness and allow one larger building to dominate other buildings.

In future, leaseholders wishing to make a claim for the right to manage on an estate with several self-contained blocks, will therefore have to set up a separate RTM company in respect of each block and each RTM company will have to make a separate claim for the right to manage.

Written by James Naylor

Partner, CG Naylor LLP.

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