Supreme Court Clarifies an RTM Co Does Not Acquire the Right to Manage a Wider Estate
Asiimwe Balinda
Property Management Solicitor - I help property managers, agents and landlords reduce service charge debt and improve their cash flow quickly.
The ‘shared responsibility’ for the management of shared estate facilities in multi block estates, have led to numerous practical difficulties for RTM companies in managing areas such as gardens and car parks.?It sometimes creates duplication of management as a result of lack of a clear framework.
Until now, an RTM company for one block could potentially take over management of wider areas which may also be shared with other buildings on the estate.
Even ARMA expressed concern, arguing that in the absence of a clear framework, RTM companies were placed in a financially precarious situation as they get their income solely from the service charges they collect from the tenants. Those charges are usually insufficient to cover the costs of managing the shared estate facilities.
Now, the unworkable problem has been laid to rest. The Supreme Court decided that leaseholders exercising the right to manage in a multi block estate will now only have the right to manage the building and other property which is exclusively enjoyed by that building.
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In the Firstport Property Services Ltd v Settlers Court RTM Company case decided on 12 January 2022, Lord Briggs, said:
“I consider that the right to manage scheme in Chapter 1 of Part 2 of the 2002 Act makes no provision within the statutory right to manage for management by the RTM company of shared estate facilities. It is concerned only with management of the relevant premises [the block], that is the relevant building or part of a building, together with appurtenant property (if any) which means nearby physical property over which the occupants of the relevant building (or part) have exclusive rights. The right to manage is an exclusive right in the RTM company to manage the relevant premises, and no provision is ??????made in Chapter 1 for any shared management of anything, save only where the RTM company chooses to agree otherwise.”
The Court went further, saying, it had a duty to decide against an interpretation of law that caused unworkable and practical difficulties. It is a welcome common-sense decision.?