Tenant take over
In some circumstances, residents can remove management function from their landlord, says Nicholas Kissen
Housing associations should be prepared for legal challenges which could see them lose their management functions to a company run by leaseholders. Under the Commonhold and Leasehold Reform Act 2002, qualifying tenants of buildings containing flats were given the right to take away the management functions of the landlord without having to prove incompetence or pay any premium to achieve this.
This process is called right to manage and applies to housing associations and private landlords. Councils are exempt, so a stock transfer to a housing association could well bestow on their leaseholders a right to take over the running of the building.
For RTM to succeed:
- there must be a building or part building that is self-contained and includes at least two flats;
- at least two-thirds of the flats must be held by qualifying tenants; primarily those with leases longer than 21 years;
- an RTM company is formed and invites non-members to join;
- once membership comprises 50 per cent of flats, a formal claim notice is served upon the landlord;
- four months later, provided no opposing counter-notice is served, the company takes over management. This is called the acquisition date.
For shared ownership leaseholders, only those who have stair-cased to 100 per cent are classified as qualified tenants. So, a building where more than one-third of flats are held by a mixture of secure tenants, assured tenants and shared owners below 100 per cent will not be eligible for RTM.
Nicholas Kissen is a senior advisor at The Leasehold Advisory Service