Law reform needed to help leaseholders take control of their buildings

Housing Secretary James Brokenshire has asked the Law Commission to look at improving the laws which allow leaseholders to manage their own buildings.

The legislation on Right to Manage is meant to put power in leaseholders’ hands and stop abuse, by allowing some leasehold property owners to take over the management of a building.

But issues with the law have stopped its usage becoming widespread. And those who have taken up the option have found delays, costs and uncertainty.

Now, as part of wider efforts to build a country that works for everyone, Mr Brokenshire has tasked the government’s independent legal advisers with conducting a broad review of Right to Manage and propose reform recommendations which improve its use in practice.

The Rt Hon James Brokenshire MP, Secretary of State for Communities, said:

“This Government is tackling unfair and abusive practices within the leasehold sector every day. Our work with the Law Commission is just one aspect of this.

“Leaseholders wanting to manage their own building should be supported to do so without the fear of uncertain, lengthy and costly court procedures.”

Law Commissioner Stephen Lewis said:

“Putting power in leaseholders’ hands can help them take control of their homes and lead to cost effective, good quality management of shared areas.

“But the law isn’t working as it should be and leaseholders are missing out on their right to manage. We’ll be looking to get to the bottom of why that is, and come up with reform recommendations that work for everyone.”

Taking control of where you live

 Under the Commonhold and Leasehold Reform Act 2002 leaseholders have the Right to Manage their building.

To use the right, leaseholders must set up a company and follow certain procedures.

Once set up, the company will be responsible for things like:

• collecting and managing the service charge
• upkeep of communal areas (such as communal hallways and stairs)
• upkeep of the structure of the building (such as the roof)
• dealing with complaints about the building from other leaseholders

But issues with the law have meant that uptake of the right to manage scheme has been low. In 2014, the CMA estimated that there were just 4,500 companies.  And those that have set them up have found have found themselves facing further administrative burdens and court procedures in order to acquire the right to manage.

As a result, the Ministry for Housing, Communities and Local Government has asked the Law Commission to look at the law and come up with reform recommendations to improve how it works in practice.

The 12-month project will start now and a public consultation on provisional proposals will be launched later in the year.

Further information

 In December 2017 the Law Commission announced that it was to start a project on residential leasehold and commonhold as part of its 13^th Programme of Law Reform.

The residential leasehold and commonhold project aims to improve consumer choice, provide greater fairness, and make the process of enfranchisement easier, quicker and more cost effective.

In February a call for evidence on commonhold was been published with a full consultation due later in the year.  On enfranchisement, the Commission will publish solutions for leasehold houses before summer recess 2018, followed in September by a detailed consultation on a new enfranchisement regime in respect of leasehold houses and flats.