Tenants’ rights of self-determination boosted

Posted: 9th January 2014

Flats to letIn a significant boost to the rights of flat tenants who want to take control of their own homes, the Upper Tribunal (UT) has ruled that a single ‘Right to Manage’ (RTM) company can validly exercise rights to take over management of more than one building and that separate applications are not required.

Two RTM companies had applied under the Commonhold and Leasehold Reform Act 2002 for the right to manage a number of flats that were located in more than one self-contained building. In each case, freeholders argued that the applications were invalid on the basis that each building had to be managed by a separate RTM company.

The freeholders submitted that a number of difficulties and absurdities would arise if one RTM company could acquire the right to manage more than one building. It was argued that tenants of smaller blocks could have their rights diluted by the majority and that single RTM companies might end up managing properties that were widely geographically separated.

In rejecting those arguments, the UT found that, on a correct interpretation of Section 72 of the Act, there was no requirement for a separate RTM company to be established in respect of each building. Where an estate of self-contained buildings shared facilities and services, the exercise of the right to manage by a single, rather than a number of, RTM companies represented a ‘practical solution’.

The UT also decided that a single application by an RTM company could embrace multiple buildings. However, it went on to rule that, in order for such an application to succeed, it must be shown that not less than two-thirds of qualifying tenants in each individual block are in favour of the move. In those circumstances, RTM companies might prefer to serve separate notices simply for the sake of clarity.