© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
The right to manage divides opinion. C&LRA 2002 provides that any agreements purporting to exclude or modify the right will be void.
Arrangements can be created so the required qualifying conditions are not met and, if not a sham, successful avoidance is possible.
Building
The premises must either be a self-contained building or part of a building. At development, it may be possible to construct a building which falls outside the scope of the Act; for example, by ensuring the block is connected to (i.e. not “structurally detached”) and not divided vertically from another structure (a clean vertical division is required). Subterranean underhangs and overhangs could be used. The meaning of “structurally detached” is due to be clarified by the Upper Tribunal this year.
Excluded Premises
Schedule 6 contains a list of premises excluded from the right to manage. These include:
Ensuring the internal floor area of non-residential parts exceeds 25 per cent of the total internal floor area of the premises (taken as a whole).
Exploiting the “resident landlord” exclusion (applies in limited circumstances).
Selling or gifting a concurrent intermediate lease of one or more apartments to a local authority, so the local authority is the immediate landlord of at least one qualifying tenant.
Leases
The total number of flats held by “qualifying tenants” must be not less than two-thirds of the total number of flats contained in the premises. A landlord could create an arrangement whereby more than one third of the flats in a given block are not let to qualifying tenants; by (for example):
Letting the flats out on assured shorthold tenancies;
Granting leases for a period not exceeding 21 years with options for non-perpetual renewal, and provision for a small premium on the grant of each renewal.
Granting leases to which Part 2 of the Landlord and Tenant Act 1954 (business tenancies) applies. Serviced apartments might satisfy this definition if the leaseholder retains substantial control and provides a comprehensive service.
RTM Company
A landlord can incorporate their own RTM company (with at least one qualifying tenant member) to prevent another RTM company exercising the right; however, any qualifying tenant could apply to become a member of the first company, so this is a risky strategy.
If the landlord owns enough qualifying flats, he could exercise the right himself, or at least incorporate a RTM company control would be retained.
Where a winding up order is made against a RTM company, the right ceases to be exercisable in the premises and may not be exercised for a further four years. A landlord may serve a winding up petition on a RTM company; for example, where it is unable to meet the landlord’s costs pursuant to s.88 of the Act.
Management Functions Outside the Lease
Finally, the RTM company acquires only those “management functions” belonging to a landlord under a lease of the whole or any part of the premises (or a party to such a lease otherwise than as landlord or tenant). Where management functions derive from another source (eg a management company recovering a contribution towards its expenditure, under its Articles of Association), arguably the 2002 Act has no application.