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Russell May
Russell May,
SENIOR ASSOCIATE - SOLICITOR
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RTM company cannot acquire right to manage more than one building
26 June 2015

The Court of Appeal has recently decided a case which will have far reaching consequences for tenants who own flats on a site which consists of two or more separate blocks. In the case of Triplerose Ltd v Ninety Broomfield Road, which concerned three separate appeals, one of which involved the seven block Holybrook estate in Reading, the question whether a Right To Manage (“RTM”) company can acquire the right to manage more than one self-contained building was decided.

It was held that a RTM company could not acquire the right to manage more than one self-contained building or part of a building. The correct interpretation of the Commonhold and Leasehold Reform Act 2002 was that there had to be one RTM company for each block. To find otherwise was inconsistent with the wording of the legislation and would undermine the purpose of the statute.

Court of Appeal decision

The Court of Appeal decision is not particularly surprising, given that the Court had to conduct a strict interpretation of the wording of the statute. However, it does lead to a much more complicated RTM structure, where there is more than one block on an estate, and  the decision is out of step with what has happened  in practice. For the vast majority of multiple block sites which are now managed by a RTM company, there will only be one RTM Company for the whole site. The legal status of these companies is now in doubt as a result of this decision, but it remains to be seen whether Landlords will see any benefit in challenging their status.

Implications for tenants

For any tenants considering the RTM Company route in future, it is clear that a notice will need to be served, and therefore the qualification on the requisite number of tenants supporting it will need to be met,  in respect of each individual block. If there are four blocks on the estate, there will need to be four separate RTM companies, producing their own service charge accounts.

Conclusions

It does seem to be something of a nonsense to have  numerous separate RTM Companies managing an estate where previously one entity was doing so, and indeed where there are communal areas it makes sense for only one entity to manage them. The court did address this issue and confirmed  that, where it was practical to do so, the RTM companies could agree to delegate management of all of the blocks to one  RTM company, or appoint a third party manager to act for all of the blocks together.

For more information about the issues in this article or to find out more about how the Property disputes team can help you please contact Russell May on 0118 952 7206 or email [email protected].

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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