Right to manage
What is the right to manage?
The right to manage is a relatively new right introduced by the Commonhold and Leasehold Reform Act 2002 as an alternative to purchase of the freehold. Essentially the right gives the tenants the right to form a company to take over the management functions of the landlord without having to buy the freehold.
Why would tenants want to use the right to manage procedure?
The tenants of a block of flats may decide that they want to manage the block themselves but do not want the expense of purchasing the freehold. If the tenants do go down this route they do not have to take over the day to day management of the building as they can appoint managing agents to take over the company’s responsibilities. This may be an attractive option where the tenants are mistrustful of the managing agents appointed by the landlord.
Do I/does my building qualify?
The building must not be more than 25% non-residential and at least two thirds of the flats must be let to qualifying tenants. Generally speaking qualifying tenants are those who have long leases (i.e. originally granted for more than 21 years).
If the building qualifies then in order to initiate a collective purchase at least half of the qualifying tenants must participate. Where there are only two flats both tenants must participate.
You should realise that this is a complex area of law and there are exceptions to the above general guidance. Please give us a call if you want to discuss your building in greater detail.
If you would like to discuss your case with us please call Ash Oberoi, Claire Allan or Leigh Shapiro on 020 7553 9000.