August 8, 2022

Lord Ahmad rejects easier right to manage – contradicting the Budget statement on the same day

LordAhmadRecommendations by the Competition and Markets Authority to make right to manage applications less problematic appear to have been rejected by the government.

The rebuff came the same day of the Budget speech (March 18) that said the government “will take forward CMA recommendations, and other actions agreed with the CMA, to improve the market for residential property management services”.

But in the Lords, Baroness Gardner asked what plans the government had to amend the qualifying threshold for leaseholders to activate a change of management.

Specifically, she referred to leaseholders who fail to reply to an RTM application to be deemed to have agreed to a change of management.

This would make it easier to meet the RTM threshold.

LKP has alerted politicians to the game-playing tactics of freeholders to frustrate RTM applications and to hold on to the lucrative but often dubious revenue streams in residential management.

Lord Ahmad, DCLG junior minister, replied:

“The Government currently has no plans to consider amending the criteria for exercising the right to manage, to enable non-responders to have been deemed to have agreed to a change of management.

“Exercising the right to manage should not be taken lightly. There are significant responsibilities; it commits members to costs and creates liabilities.

“In the circumstances we believe that it is essential that everyone understands the responsibilities and commitments they are making and it is therefore important they are actively engaged in the process.”

It is not known whether Lord Ahmad’s remarks amount to a rejection of all the recommendations concerning right to manage in the CMA’s leasehold management report of December last year.

The CMA report stated:

“There are also circumstances in which it can be difficult or impossible to obtain RTM, for example rights do not apply if the proportion of commercial property is above 25% or if not all flats have been sold, and it can be difficult to meet the required thresholds in mixed blocks with tenants, as is likely in housing association blocks.

“We also heard of cases where landlords or property managers have tried to put residents off by highlighting potential risks and costs and seeking to hold RTM Co directors responsible for any legal costs arising.

“One in five of the leaseholder survey respondents who said that there had been an attempt to introduce RTM recalled the attempt as unsuccessful (20%) …”

Phillip Rainey, QC, makes the case for easier RTM

Phillip Rainey, QC, makes the case for easier RTM

The issue of easier RTM was also addressed by Phillip Rainey QC at the Leasehold Knowledge Partnership Westminster round-table on January 29.

He pointed out that after RTM was introduced in 2002 the intention was that Parliament would extend it after it had bedded in.

Mr Rainey also referred drily to freeholders and their lawyers frustrating right to manage:

“There is currently a cottage industry in resisting RTM because acquisition of the right is beset by technicality and because, if the landlord wins, he gets his costs, but if the tenants win, they don’t.

“Acquisition procedures should be simplified and the effective one-way cost-shifting repealed.

“More fundamentally, it might be queried why 50% of tenants should have to back RTM (by joining the RTM company) given that once it is acquired, the numbers who are members of the company may drop below 50% without any particular consequence.

“Perhaps 35% should be the cut-off?”

It seems likely that Lord Ahmad’s rejection of right to manage reform is not the last word on the subject.

Comments

  1. Campaign against retirement leasehold exploitation Readers,

    Does this Lord Ahmad DCLG Junior Minister in the House of Lords represent The Prime Minister and the Conservative Party?

    We have been informed, the reason nothing seems to change regarding Leasehold is the fact that MPs are involved as Landlords and Freeholders even though they admit to having an interest in this area, they do not make it clear in the House of Commons/Lords the level of interest they have in this area.

    The words mentioned basically state that they have an interest as seen in the in the Register of Interests?

    This is what was stated by Ahmad:-

    “The Government currently has no plans to consider amending the criteria for exercising the right to manage, to enable non-responders to have been deemed to have agreed to a change of management.
    Exercising the right to manage should not be taken lightly. There are significant responsibilities; it commits members to costs and creates liabilities. “In the circumstances we believe that it is essential that everyone understands the responsibilities and commitments they are making and it is therefore important they are actively engaged in the process.”

    Is this a clear response from the Conservative Party?

    Has the Conservative Party chosen to ignore the voting capacity of Pensioners?

    Have we been written off again?

  2. Paul Joseph says

    The statement:

    “There are significant responsibilities; it commits members to costs and creates liabilities.”

    is disingenuous.

    I am a member of an RTM company that gave Peverel/OM the boot. The maximum liability any member of the company faces in the event of it failing is £1. We have Directors and Officers insurance which costs a few hundred pounds a year and provides coverage well in excess of what are likely ever to need. In short, the risks of RTM on the liability side are small. They are so small compared to the alternative, continuing to be ripped off by a monetizing freeholder, that the statement above is just dishonest.

    As for the responsibilties, that part is fair comment, but the responsibilities are hardly onerous. They consist chiefly in appointing and supervising an honest managing agent that doesn’t engage in monetizing practices.

    • Lesley Newnham says

      I agree Paul. I am also a Director of an RTM Co but our responsibilities are somewhat greater as we chose to manage ourselves mostly because we did not trust any managing agents ARMA registered or not and needed every penny to bring our properties back to the standard they should be after years of neglect and mismanagement!!
      After 5 years we are almost there and although it has been stressful and difficult at times it is still far better than being ‘ ripped off ‘!!

      • Paul Joseph says

        Personally, I regard ARMA as a worthless organization. We made sure to appoint an LKP accredited agent after a rigorous tender exercise. After that much is down to the quality of the property manager.

        We are not 5 years in but I think it will take that long to undo the damage wrought by Peverel/OM alias FirstPort.

        I would very much like to see a class action lawsuit against this company. They’ve gotten away with too much for too long and settled with non-disclosure agreements too often.

  3. Michael Epstein says

    Funny that! Was it not the great sell off of council houses that was the “big” conservative idea?
    Owning instead of renting are there not significant responsibilities committing owners to costs and creating liabilities?

  4. “Right to Manage” is about all giving leaseholders the right to manage their own money and how it is spent in maintenance of the building which houses their leasehold flats. The right to manage is automatically given to flat owners in every block under Commonhold title in the rest of Europe and under strata title in Australia.

    Why does the Coalition Government appointed Housing Ministers who think the English and Welsh leaseholders are less competent to manage the service charge spending for their own blocks compared to their European and Aussie counterparts? It makes no sense to leave the service charge account in the custody of the freeholders when many of their managing agents have a track record of engaging in leasehold abuse.

    Why does the Coalition Government not defend the interests of the 4.1 million private leaseholders who will be voting for the next Government in May ? The Government has a duty under the EU Human Rights Article 8 to defend the interests of its citizens homes and its failing to doing this.

  5. With the General Election coming up , lets tell every MP candidate we leaseholders are suffering under the unfair leasehold system and we want an early end to the leasehold system if they are successfully elected MP.

    Also write weekly letters to the Editor of your local newspaper for your town and city to spread the message.