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Tenant’s Right to Manage – Time for Change?

The procedure for tenants to take control of the management of their buildings is on the radar for reform as the Law Commission launches a consultation which closes on 30 April. To find out more about that right to manage (the “RTM”) click here and to understand the areas under examination read on!

Exercise of the RTM sees limited take-up and the Law Commission is asking why, putting forward proposals which include:

  • extending the RTM to buildings with more than 25% non-residential space and to leasehold houses;
  • allowing shared ownership tenants to qualify for the RTM, whether or not they have acquired 100% of the shares in their leases;
  • a flexible model allowing multiple buildings to be managed under one RTM company where those buildings contribute to a common service charge and/or share the use of the same common parts;
  • giving the Upper Tribunal Lands Chamber a discretion to waive any requirement, or allow a notice to be fixed after an error (which can all too easily be made) , as well as reducing the grounds upon which a notice can be challenged;
  • abolishing the rule that once a RTM company has been established for one set of premises, there can be no other RTM company for that premises (this prevents “sham” RTM companies being set up by landlords and managing agents to prevent tenants from acquiring the RTM); and
  • encouraging prospective directors of RTM companies to undertake free training on the procedure and their obligations (as there is currently concern about the lack of knowledge some RTM directors have).The Law Commission is also keen to hear views as to whether the RTM company should continue to make contributions to the landlord’s costs for disputes and how this could be limited to make it fairer than the current process.

Interestingly, at the same time, the Ministry of Housing, Communities and Local Government is looking at setting professional standards for managing agents. The Law Commission is seeking views on whether RTM companies should be required to use a managing agent that meets this standard.

The Law Commission is also keen to hear views as to whether the RTM company should continue to make contributions to the landlord’s costs for disputes and how this could be limited to make it fairer than the current process.

Whilst the Law Commission is clearly looking to increase take-up of the RTM, the consultation acknowledges the concerns of landlords and managing agents as well as tenants about the RTM regime more generally. However, the frustrations of the current letting process continue to make the news and efforts to make the sector more tenant-friendly are unlikely to die down any time soon. More information about the consultation and how to respond can be found here.