Tag Archives: RTM Companies

Improvement notice relating to apartment block should have been served on tenants

Where an apartment block is managed by a Right to Manage (“RTM”) Company who can a local housing authority serve an improvement notice on requiring work? Can an improvement notice still be validly served on the landlord under paragraph 4(2) of Schedule 1 to the Housing Act 2004 (“the Housing Act”)?

In the Upper Tribunal (Lands Chamber)case of Hastings Borough Council v Braear Developments Ltd [2015] Hastings Borough Council served an improvement notice requiring work to the common parts on Braear Developments Limited, the freeholder, and on the RTM Company.

Previous freeholders had granted long leases of the five first, second and third floors flats in the building, for a term of 99 years. The leases of the flats granted rights over the only means of access. Four of the five flats in the building were sublet on assured tenancies by the lessees. The fifth flat was not let, but if it were, the recipient of the rack-rent would be the lessee.

The Tribunal said looking at the building as a whole, the “person in control”, in the statutory sense of the person(s) in receipt of the rack rents, were the lessees of the five flats.

It would be wrong to ascribe a notional rack-rent to the common parts of the building, when there is no realistic possibility of such a rent being received.

The persons in control of the building were the lessees of the five flats.

Collectively they received the rack-rent of the building. So they satisfied the description in section 263(1) of the Housing Act.

Neither the respondent, as freeholder, nor the RTM Company could be served with an improvement notice in relation to any part of the building.

The freeholder did not qualify to receive the notice as the “person in control” of a House in Multiple Occupation (“HMO”) because it did not receive the rack-rents of the premises and so did not match the description in section 263(1) of the Housing Act. The RTM Company was in the same position.

Nor were either of the freeholder or the RTM a “person managing the building” within section 263(3) of the Housing Act. The respondent received a ground rent from the lessees, but no rent from persons who were in occupation as tenants or licensees of parts of the premises. The RTM Company received no rent at all.

So, in relation to the building as a whole, paragraph 2 of Schedule 1 to the Housing Act required the improvement notice to be served on the lessees collectively, and, to the extent that work was required within any individual flats, it required each lessee of those flats to be served with the notice requiring that work.

Paragraph 2 of Schedule 1 to the Housing Act applies only to HMOs which are not licensed. So where a building is an HMO subject to licensing it would normally be expected that an improvement notice would be served on the person holding the licence.

This building was subject to licensing as an HMO but it was not licensed.

Had the RTM Company obtained an HMO licence under Part 2 of the Act, as it should, it would have been the appropriate person on whom an improvement notice ought to be served under paragraph 1 of Schedule 1. As it had failed to do so the notice was to be served on the lessees collectively under paragraph 2.

There may be circumstances where a local housing authority could, and might have to, serve an improvement notice in relation to common parts either on the freeholder or on some or all of the lessees of flats. Each case would turn on which of those owners “ought to take the actions specified in the notice” in the circumstances. For example, where an RTM company has the management the freeholder would have no power to undertake works and no entitlement to recoup the costs of works from lessees.

Here, the better course would be to direct any improvement notice at those lessees who are members of the RTM company and who are therefore collectively able to control the RTM company’s decisions. Usually the RTM company would be able to carry out the works and to recoup their costs under service charges.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Housing: Corresponding date rule validated Right to Manage Claim Notice

An application may be made for the appointment of a manager of leasehold housing under the Commonhold and Leasehold Reform Act 2002 (“2002 Act”).

Section 80 of the 2002 Act prescribes that the claim notice:

– must specify a date, at least one month after “the relevant date”, by which each person who was given the notice under section 79(6) may respond to it by giving a counter-notice under section 84 (Section 80(6)) and

– must specify a date, at least three months after that specified as above, on which the Right To Manage company (“RTM company”) intends to acquire the right to manage the premises (Section 80(7)).

In the Upper Tribunal Lands Chamber) case of Windermere Court Kenley RTM Company Ltd v Sinclair Gardens Investments (Kensington) Ltd [2014] “the relevant date” was the 29th August 2013, when the claim notice was given, and the 30th September 2013 was the date specified under section 80(6) and the 31st December 2013 was the date specified under section 80(7).

Issue: whether a specified date of 31st December 2013 satisfied the requirements of section 80(7) or whether the earliest date it could have been was 1st January 2014.

The Tribunal said:

– The corresponding date in the following month or months was to be used as the date of calculation particularly where, as here, there was one.

– The application of the corresponding date rule in this case required that the start time specified for the RTM company must be a date ‘after’ midnight on 30th-31st December 2013.

– The start-time the claim notice specified for the RTM company was 31st December 2013.

– 31st December was the day ‘after’ midnight on 30th-31st.

Accordingly specifying 31st December 2013 as being the first day three months “after” the 30th September 2013 satisfied the requirements of section 80(7). So the claim notice complied with the provisions of section 80 of the 2002 Act.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Tribunal kept power to hear case & award costs even after Company withdrew right to manage flats application

Where a right to manage (“RTM”) company withdraws an application made to acquire the right to manage a building containing self contained flats under the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”):

– is the applicant’s communication of its intention sufficient to effect the withdrawal and end the proceedings or

– does the withdrawal kick in only when the tribunal consents to the withdrawal so that, until then, the tribunal continues to have jurisdiction over the matter to enable it to determine the substantive dispute and order costs?

In O Twelve Baytree Limited, R (On the Application Of) v The Rent Assessment Panel [2014] Beckett House RTM Co. Ltd., (“the RTM”), served a claim notice seeking to acquire the right to manage the property with effect from 11 February 2013.

On 2 April 2013, the RTM wrote to the tribunal ” we … withdraw the Claim Notice, and therefore …the hearing listed for 4 April is cancelled and [the RTM] application is withdrawn.” The tribunal treated that communication as a withdrawal of the application and a cancellation of the hearing. The Claimant contended that the RTM could not unilaterally withdraw its application. It was concerned that the Claimant had incurred costs in preparation for the hearing. It wanted to ensure that the tribunal retained jurisdiction to deal with the application and make any orders including on costs.

The High Court said the legislation contemplated that an application may be withdrawn. That was implicit in section 87(1) of the 2002 Act which recognised that if an application is withdrawn, the claim notice is also deemed to be withdrawn. Section 87(2) of the 2002 Act also provided for “the date of the withdrawal of the application” to be the date upon which the claim notice is deemed to be withdrawn (section 87(2)(b) of the 2002 Act).

The provisions of the 2002 Act were, however, silent on the question of what steps or procedures must be followed in order to bring about a withdrawal of the application. The 2002 Act was also silent on the question of whether a withdrawal is effected solely by the RTM giving notice to the tribunal (or the other parties) of its wish to withdraw the application or whether the tribunal must agree to the withdrawal.

The 2002 Act contained indications that the RTM would not be able to bring about the end of the proceedings simply on giving notice of withdrawal especially in the provisions relating to costs i.e. that the RTM would be liable for the reasonable costs incurred by the giving of the claim notice. Also under section 88(3) of 2002 Act the RTM would be responsible for the costs incurred in proceedings before a tribunal.

However the RTM’s liability for costs incurred as a party to proceedings before the tribunal only arose, if the tribunal dismissed the application.

Since:

– section 89(2) of the 2002 Act said liability for costs continued down to the withdrawal of the application and

– such liability would only arise if the tribunal dismissed the application

the Court took this to indicate that the tribunal retained jurisdiction over an application even where the RTM had given notice that it intended to withdraw. So the withdrawal would only be effective when accepted by the tribunal and when the tribunal dismissed the application, e.g. by dismissing the application on withdrawal.

This sounds like an expedient to make good a deficiency in the legislation by artificially protracting proceedings beyond the RTM’s withdrawal to enable the tribunal to dismiss the application and trigger its own jurisdiction to award costs. The court acknowledged that the tribunal would have no duty to hear and determine the underlying merits of the case in those circumstances.

So the tribunal had been wrong to believe that the notice of withdrawal ended its jurisdiction including to award costs.

This blog has been posted as a matter of general interest. It does not remove the need to get bespoke legal advice in individual cases.