Right To Manage – Land Mark Decision - Estate Areas

Since its introduction by the Commonhold and Leasehold Reform Act 2002, many leaseholders have acquired the right to manage their block. By acquiring the right to manage, leaseholders get the right to perform the “management functions” in place either of the landlord or any other person upon whom management rights are conferred under the terms of the leases of the flats.

 Frequently a block of flats forms part of a wider estate, containing other blocks of flats or houses. In addition, there’s likely to be shared facilities or amenities. These so-called estate facilities will be managed either by a common landlord or other third party, and the associated costs recovered from lessees and owners within the estate. An issue that, until now, has caused problems with the ongoing management of the estate facilities was what rights of management the RTM company has in relation to the estate facilities. This was the issue under consideration by the Supreme Court in FirstPort Property Services Ltd v Settlers Court RTM Company Ltd and others. Managing Agents described the real-world challenges arising from shared management responsibility, including some of the common challenges and difficulties they faced when managing estates where there are shared services (i.e., between the RTM block and other parts of the estate).

Ruling

The case reached the Supreme Court after the UT issued a leapfrog certificate for an appeal. The Supreme Court unanimously allowed the appeal and, in doing so, held that the 2012 Court of Appeal case known as Gala Unity was wrongly decided. The Supreme Court found that the right to manage does not extend to the RTM company managing the shared estate facilities, which do not form part of the “premises” over which the RTM is exercisable. Gala Unity is now overruled.

What Does the Decision Mean for Block Managing Agents and those self-managing?

This decision is welcome clarification on the dual management issue, and we now have a clear decision from the Supreme Court on who performs the estate facilities, and how the associated costs are recovered.  The practical challenges of dual management were highlighted in the submissions 

It was also recognized that Gala Unity has stood as binding authority for several years, and that estate facilities in many estates may at present be being managed under shared agreements made by RTM companies and others on the assumption that the law was as set out in that case.  No further guidance was given by the Court as to what happens in these circumstances. The Ringley Group are experts in Right To Manage and if you have an interest in undertaking an RTM application please feel free to contact us and we will guide you