The problems with Right to Manage                  

The first question is whether “building” can be interpreted to mean “buildings”. Section 6 of the Interpretations Act 1978, provides that “unless the contrary intention appears ... words in the singular include the plural”.

It is arguable the contrary intention appears. Under the qualifying requirements for collective enfranchisement (which are materially identical), it is accepted the right can only be exercised in relation to single buildings (the County Court decision Garden Court NW8 Property Court Ltd. v Becker Properties is considered correct).

By contrast, the appointment of a manager, can include multiple buildings. It has also been decided the phrase “building” can mean more than one building where there was an acquisition pursuant to the tenants’ right of first refusal (the Court of Appeal decision: Long Acre Securities v Karet has been criticised by some).

Secondly, and equally perplexing, is the question of whether a single RTM company can serve more than one claim notice, in relation to multiple blocks. The argument against is that a RTM company is only a valid in relation to premises if “its memorandum of association states its object...is the acquisition and exercise of the right to manage the premises”, while “premises” can only mean one building or part of a building.

This argument is considered to be correct by several leading authorities, but the LVT disagreed in Dawlin RTM Ltd. v Oakhill Park Estates and, more recently, in Kingsmere RTM Company v Anstone Properties (although the claim was dismissed because the claim notices were not served simultaneously and so the RTM company had acted ultra vires).

In Belmont Hall Court and Elm Court RTM Company v The Halliard Property Company, by contrast, the LVT decided that a RTM company can only be for a single set of premises, but, depending on the facts, these may comprise more than one building (it did not, in that case).

Finally, the Court of Appeal will soon consider the meaning of “appurtenant property” in Gala Unity v Ariadne Road RTM Company. Previously, the Upper Tribunal ruled “appurtenant property” should include property over which tenants have rights (eg access roads and gardens). The appellant will argue the phrase should be more restrictive, to mean only property included within the demise of individual leases.

Until these issues are resolved, leaseholders face a quagmire of uncertainty, along with the possibility of an expensive LVT hearing to determine whether they qualify. This cannot have been the legislative intent and hopefully some judicial guidance will follow.

Roger Hardwick is Head of Enfranchisement at Brethertons Solicitors