The right to manage matryoshka doll

The right to manage is a creature of statute, governed by part 2 of chapter 1 of the Commonhold and Leasehold Reform Act 2002. It provides a fault-free and relatively straightforward procedure to enable long leaseholders of flats to acquire the right to manage the buildings in which their flats are contained. In Assethold Ltd v Eveline Road RTM Co Ltd [2024] EWCA Civ 187; [2024] PLSCS 44, the Court of Appeal was asked to determine a novel point; namely, when part of a self-contained building was subdivided into smaller parts, whether the RTM company was required to serve its claim notice in respect of the smallest qualifying part of the building satisfying the definition of “premises” under section 72. A self-contained part… Assethold Ltd was the freehold owner of a property situated at 36 Eveline Road, Mitcham, south London, which originally comprised two terraced houses that were subsequently converted into four flats. All of the flats were subsequently let on long leases. Eveline Road RTM Co Ltd was the RTM company formed by the leaseholders of the flats to acquire the right to manage 36. The terrace in which 36 was situated was structurally detached. On its eastern side, 36 was not structurally attached to anything, but on its western side it shared a party wall with its neighbour, 38. On 28 July 2021, Eveline gave Assethold notice of its claim to acquire the right to manage 36. Assethold served a counter notice denying the claim. In reliance on the Court of Appeal decision in Ninety Broomfield Road RTM Co Ltd v Triplerose Ltd [2015] EWCA Civ 282; [2015] EGLR 51, Assethold’s primary argument was that 36 comprised two separate buildings, each of which qualified as a separate set of premises within the meaning of section 72(1). Accordingly, under the 2002 Act an RTM company could not make a claim in respect of more than one set of qualifying premises as defined under section 72. Of a building that itself… The First-tier Tribunal found Eveline did have the right to acquire 36. It determined that 36 constituted a single building for the purposes of the 2002 Act and Eveline had complied with the statutory requirements for making the claim. Further, in reaching its decision the FTT focused on the fact that Assethold had consistently treated 36 as a single building for the purposes of insurance and services. On appeal to the Upper Tribunal (Lands Chamber), Assethold was successful in setting aside the FTT’s decision. The UT found the FTT had failed to focus on the tests set out in section 72 in relation to the two categories of “qualifying premises”; namely, the self-contained buildings and self-contained parts of buildings. The tests were physical tests. They depended on the structure of the relevant premises and, with regards to the test for self-contained parts of buildings, on the ability to carry out independent redevelopment of that part and the nature of the services provided to the same. Contained part of the same building The UT found for Eveline on appeal, but for different reasons to the FTT. The UT determined that neither 36 nor its constituent parts qualified as a self-contained building. The terrace as a whole, however, was a self-contained building and consequently 36 satisfied the definition of a self-contained part of a building. On consideration of the reasoning of the Court of Appeal in 41-60 Albert Mansions Ltd v Craftrule Ltd [2011] EWCA Civ 185; [2011] 2 EGLR 35, which concerned a similar statutory provision under the Leasehold Reform, Housing and Urban Development Act 1993, the UT found there was nothing in the 2002 Act that excluded from the right to manage a self-contained part of a building that itself contained part or parts of the same building. The UT’s findings were upheld on appeal. The Court of Appeal agreed with the UT that the question of whether premises satisfied the definition of “self-contained building or part of a building” was a purely physical test. The definition was concerned only with the structure of the built envelope, its internal structure and the separability of services. Section 72 had to be construed within its statutory framework as a whole. There was nothing within the provisions of the 2002 Act which supported Assethold’s argument that an RTM company could not make a claim in respect of a self-contained part of a building which itself contained a self-contained part or self-contained parts of the same building. Further, Triplerose was not authority for the same. The Court of Appeal’s decision will bring welcome relief to leaseholders whose qualifying premises are a self-contained part, which comprise of smaller self-contained parts that can be sub-divided. This case highlights the importance of leaseholders paying attention to the physical structure of their buildings to ensure it meets the physical tests required under section 72 if the right to manage is to be acquired. Key points It is important to ensure premises meet the physical tests for qualifying premises under section 72 of the Commonhold and Leasehold Reform Act 2002 If a building satisfies the test under section 72, an RTM company is not required to serve its claim notice in respect of the smallest part of the premises satisfying the statutory definition Elizabeth Dwomoh is a barrister at Lamb Chambers