• news-banner

    Expert Insights

Q&A: Shared facilities under the right to manage

Question

We have recently obtained the right to manage our block of flats, which forms part of a wider estate containing other blocks of flats. We share facilities and other amenities with these other blocks, and these have historically been maintained by the freeholder’s management company (pursuant to the terms of our leases), which in turn charges all leaseholders their proportion of the costs.

Have we now acquired the right to manage the wider estate facilities that are shared with the leaseholders of other buildings on the estate? If not, do I have to pay these charges to the freeholder’s management company despite our right to manage?

Answer

It is likely that, without any other agreement, your right to manage will be limited to your block of flats and will not extend to facilities shared with leaseholders of other blocks. Therefore, you will still be liable for your proportion of the charges raised by the management company in relation to those facilities.

Explanation

Long leaseholders are capable of being granted the “right to manage” by virtue of the Commonhold and Leasehold Reform Act 2002. This allows the leaseholders to take over the management of the block of flats from a pre-existing manager or the freeholder (as the case may be) via a right-to-manage company. It is possible that some estates comprise multiple buildings but share services, facilities and amenities between them, which are provided by the pre-existing manager or freeholder. Uncertainty has arisen as to what happens in respect of these shared services in cases where the leaseholders of one building have acquired a right to manage that building.

Until very recently, it was the case that an RTM company in respect of a block of flats forming part of a wider estate, would (subject to an agreement to the contrary) become responsible for managing the common parts on the wider estate. The Court of Appeal considered in Gala Unity Ltd v Ariadne Road RTM Co Ltd that the common parts were appurtenant property under the 2002 Act and fell within the definition of “premises” over which the RTM company had statutory management rights and obligations. However, the provisions of the 2002 Act made it at least very likely that the previous management company or freeholder continued to owe obligations to the leaseholders of the other blocks on the estate (which had not exercised the right to manage) in respect of the common parts. The decision therefore caused practical difficulties where no agreement was reached in respect of how the shared estate services should be managed and charged for, including issues over the division of responsibility, disenfranchisement and solvency.

Following the recent Supreme Court decision in FirstPort Property Services Ltd v Settlers Court RTM Co Ltd and others, this position has been reversed. The court examined the provisions of the 2002 Act and concluded that an RTM company’s statutory rights do not extend to the management of wider estate shared facilities or amenities. The statutory rights are limited to the management of the “premises” (ie the particular building, or part thereof) that are exclusive to the leaseholders who have acquired the right to manage. In the words of Lord Briggs (giving the unanimous judgment of the court), the premises extend only to “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”. This would likely include, for example, a bike shed that exclusively serves that particular block of flats.

Therefore, unless there is a shared management agreement providing otherwise, the position is that the pre-existing manager or freeholder would still be responsible for the provision of the shared services and that all leaseholders (including those forming the RTM company) would be liable for these charges.

A question mark remains over who is responsible for managing shared facilities within blocks (for example, a gym that is shared with other estate leaseholders), as it was not a question that was specifically addressed by the Supreme Court in FirstPort. However, it seems likely that the RTM company will acquire the right to manage any shared facilities that are located within the building over which it acquires statutory management rights.

This therefore remains a situation in which issues of dual management can arise and where the parties would be well advised to discuss how management (and the costs thereof) is to be shared early on in the process. If the parties cannot reach an agreement in relation to these matters, the dispute will need to be determined by the First-tier Tribunal. 


Written by Samuel Lear and Kimberley Ziya. Samuel Lear is an associate in the real estate disputes team at Charles Russell Speechlys LLP and Kimberley Ziya is a barrister at Landmark Chambers

An original version of this article was first published on Estates Gazette. For more information, please contact Samuel Lear or your usual Charles Russell Speechlys contact. 

Our thinking

  • Mental Health Management

    Nick Hurley

    Events

  • James Souter writes for City AM on Meta pulling out of its London office

    James Souter

    In the Press

  • Charles Russell Speechlys advises Puma Private Equity on its £3.5 million investment into TravelLocal

    David Coates

    News

  • China Daily, and other titles, quote Silvia On on trends affecting Chinese HNWIs

    Silvia On

    In the Press

  • The Evening Standard quotes Rose Carey on the increase in visa fees

    Rose Carey

    In the Press

  • Charles Russell Speechlys advises Zenzero’s management team on its majority acquisition by Macquarie Capital

    Mark Howard

    News

  • David Savage writes for Construction News on the upcoming building-control overhaul

    David Savage

    In the Press

  • Updates and points to note in relation to buy-to-let residential properties

    Twiggy Ho

    Insights

  • Felicity Chapman writes for Insider Media on alternatives to court for divorcing business owners

    Felicity Chapman

    In the Press

  • Investment Week quotes Julia Cox on the proposed scrapping of inheritance tax

    Julia Cox

    In the Press

  • Charles Russell Speechlys expands commercial offering with the appointment of Rebecca Steer

    Rebecca Steer

    News

  • The Times quotes Gareth Mills on the CMA’s preliminary approval of the Activision Blizzard-Microsoft deal

    Gareth Mills

    In the Press

  • Heritage property and conditional exemption

    Sarah Wray

    Insights

  • Property Week quotes Cara Imbrailo on Rishi Sunak scrapping MEES requirements for residential landlords

    Cara Imbrailo

    In the Press

  • The Financial Times quotes Emma Humphreys on UK rental costs

    Emma Humphreys

    In the Press

  • Stamp Duty Refund - New Impetus To Eligible Incoming Talents

    Ian Devereux

    Insights

  • City AM quotes Gareth Mills on the CMA’s new set of principles for regulating AI

    Gareth Mills

    In the Press

  • Hamish Perry and Mike Barrington write for The Evening Standard on whether a merger between the CBI and Make UK can work

    Hamish Perry

    In the Press

  • Silicon quotes Gareth Mills on the UK consumer lawsuit against Google

    Gareth Mills

    In the Press

  • Common construction claims in Bahrain

    Mazin Al Mardhi

    Insights

Back to top