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The right to manage was introduced by the Commonhold and leaseholder Reform Act 2002, which created the ability for a “right to manage” company (‘RTM company’) to be formed and exercise the management functions contained in the leases, such as insuring the block and collecting service charges. This right is exercisable in respect of a self-contained building or self-contained part of a building.
It had previous been held by the Upper Tribunal (Lands Chamber) that an RTM company could acquire the right to manage more than one set of premises. However, these decisions had only been made in cases where the applications had been by an RTM company looking to manage more than one building on a single estate.
The Court of Appeal was recently asked to decide whether the Act allowed an RTM company to manage all of the buildings on an estate, or whether it was restricted to just a single building. In Triplerose Limited and others v Freehold Managers (Nominees) Limited and others  EWCA Civ 282, the Court of Appeal held that an RTM company could only be formed to manage a single block or building within the meaning of the Act.
The Court of Appeal looked at the Act as a whole and considered Parliament’s intentions and held that the Act clearly referred to single premises. The judges also considered that having an RTM company managing more than one block would lead to conflict of interest between leaseholders of different buildings and also of voting inequality. Examples of these would be if one block wanted to increase service charge whilst another didn’t, or if one block wanted to undertake major works and another didn’t.
This means that in future, an RTM company will need to be formed for each separate block on an estate. This could prove to be costly for leaseholders, as the costs of forming the company (including paying the landlord’s legal costs) will not be spread amongst as many leaseholders.
In addition, this decision may open the doors for future litigation – given the number of RTM companies in existence which currently manage more than one block. This decision is likely be seized on by landlords who now wish to wrestle back the management functions of the leases.
This article is for information purposes only and is not legal advice. It should not be acted or relied upon and legal advice should be sought before applying any of the information in this article to any facts or circumstances.