[2024] UKUT 335 (LC)

Chapter 2, Part 1, of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) enables qualifying tenants of a self-contained building, or a self-contained part of a building, to acquire the right to manage it, through a nominee company known as an RTM company, on a no-fault basis; there is no need to prove that there was anything wrong with the landlord’s management. All the company has to do is to follow the correct procedure. That is not so simple as it sounds; landlords are keen to find flaws in the procedure followed by an RTM company and to argue that such flaws make the whole process invalid so that the RTM company has to start again. The relevant provisions of the 2002 Act are as follows.

Section 72 provides:

“(1)

This Chapter applies to premises if—

(a)

they consist of a self-contained building or part of a building, with or without appurtenant property,

(b)

they contain two or more flats held by qualifying tenants, and

(c)

the total number of flats held by such tenants is not less than two-thirds of the total number of flats contained in the premises.

(2)

A building is a self-contained building if it is structurally detached.

….”

Section 75 states:

“(2)

a person is the qualifying tenant of a flat if he is tenant of the flat under a long lease.

…

(5)

No flat has more than one qualifying tenant at any one time; and subsections (6) and (7) apply accordingly.

(6)

Where a flat is being let under two or more long leases, a tenant under any of those leases which is superior to that held by another is not the qualifying tenant of the flat.

(7)

Where a flat is being let to joint tenants under a long lease, the joint tenants shall (subject to subsection (6)) be regarded as jointly being the qualifying tenant of the flat.”

and a “long lease” is defined in section 76:

“(2)

Subject to section 77, a lease is a long lease if—

(a)

it is granted for a term of years certain exceeding 21 years, whether or not it is (or may become) terminable before the end of that term by notice given by or to the tenant, by re-entry or forfeiture or otherwise,

(b)

it is for a term fixed by law under a grant with a covenant or obligation for perpetual renewal (but is not a lease by sub-demise from one which is not a long lease),

(c)

it takes effect under section 149(6) of the Law of Property Act 1925 (c. 20) (leases terminable after a death or marriage or the formation of a civil partnership),

(d)

it was granted in pursuance of the right to buy conferred by Part 5 of the Housing Act 1985 (c. 68) or in pursuance of the right to acquire on rent to mortgage terms conferred by that Part of that Act,

(e)

it is a shared ownership lease, whether granted in pursuance of that Part of that Act or otherwise, where the tenant's total share is 100 per cent., or

(f)

it was granted in pursuance of that Part of that Act as it has effect by virtue of section 17 of the Housing Act 1996 (c. 52) (the right to acquire).”

Section 112(2) sets out the following definition:

“(2)

In this Chapter “lease” and “tenancy” have the same meaning and both expressions include (where the context permits)—

(a)

a sub-lease or sub-tenancy, and

(b)

an agreement for a lease or tenancy (or for a sub-lease or sub-tenancy),

but do not include a tenancy at will or at sufferance.”

Section 78 introduces the notice of invitation to participate:

“(1)

Before making a claim to acquire the right to manage any premises, a RTM company must give notice to each person who at the time when the notice is given—

(a)

is the qualifying tenant of a flat contained in the premises, but

(b)

neither is nor has agreed to become a member of the RTM company.

(2)

A notice given under this section (referred to in this Chapter as a “notice of invitation to participate”) must—

(a)

state that the RTM company intends to acquire the right to manage the premises,

(b)

state the names of the members of the RTM company,

(c)

invite the recipients of the notice to become members of the company, …

(3)

A notice of invitation to participate must also comply with such requirements (if any) about the form of notices of invitation to participate as may be prescribed by regulations so made.”

The RTM company’s claim to acquire the right to manage is communicated to the landlord and others by giving them a claim notice. Section 79 provides:

“(1)

A claim to acquire the right to manage any premises is made by giving notice of the claim (referred to in this Chapter as a “claim notice”); and in this Chapter the “relevant date”, in relation to any claim to acquire the right to manage, means the date on which notice of the claim is given.

(2)

The claim notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before.

(3)

The claim notice must be given by a RTM company which complies with subsection (4) or (5).

(4)

If on the relevant date there are only two qualifying tenants of flats contained in the premises, both must be members of the RTM company.

(5)

In any other case, the membership of the RTM company must on the relevant date include a number of qualifying tenants of flats contained in the premises which is not less than one-half of the total number of flats so contained.

(6)

The claim notice must be given to each person who on the relevant date is—

(a)

landlord under a lease of the whole or any part of the premises,

(b)

party to such a lease otherwise than as landlord or tenant, or

(c)

a manager appointed under Part 2 of the Landlord and Tenant Act 1987 (c. 31) (referred to in this Part as “the 1987 Act” ) to act in relation to the premises, or any premises containing or contained in the premises.

(7)

Subsection (6) does not require the claim notice to be given to a person who cannot be found or whose identity cannot be ascertained; but if this subsection means that the claim notice is not required to be given to anyone at all, section 85 applies.

(8)

A copy of the claim notice must be given to each person who on the relevant date is the qualifying tenant of a flat contained in the premises.”

Section 80 sets out the information that the claim notice must contain, including the following requirements:

“(2)

It must specify the premises and contain a statement of the grounds on which it is claimed that they are premises to which this Chapter applies.

(3)

It must state the full name of each person who is both—

(a)

the qualifying tenant of a flat contained in the premises, and

(b)

a member of the RTM company,

 and the address of his flat.

(4)

And it must contain, in relation to each such person, such particulars of his lease as are sufficient to identify it, including—

(a)

the date on which it was entered into,

(b)

the term for which it was granted, and

(c)

the date of the commencement of the term.

(5)

It must state the name and registered office of the RTM company.

(6)

It must specify a date, not earlier than 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.

(7)

It must specify a date, at least three months after that specified under subsection (6), on which the RTM company intends to acquire the right to manage the premises.

(8)

It must also contain such other particulars (if any) as may be required to be contained in claim notices by regulations made by the appropriate national authority.

(9)

And it must comply with such requirements (if any) about the form of claim notices as may be prescribed by regulations so made.”

Section 82 enables the RTM company to ask for information that it needs in order to meet those requirements:

“(1)

A company which is a RTM company in relation to any premises may give to any person a notice requiring him to provide the company with any information—

(a)

which is in his possession or control, and

(b)

which the company reasonably requires for ascertaining the particulars required by or by virtue of section 80 to be included in a claim notice for claiming to acquire the right to manage the premises.

Section 84 makes provision for any of the recipients of a claim notice set out in section 79(6) to challenge it by serving a counter-notice, and in that event the notice is deemed withdrawn unless within a prescribed time-limit the RTM company makes an application to the FTT for a determination that it was on the relevant date entitled to acquire the right to manage (sections 84 and 85). Not all recipients of the claim notice can serve a counter-notice; a tenant, who is entitled to a copy of the claim notice under section 79(8), cannot do so.

Where there is no objection to the claim notice, either because no counter-notice is given or because the counter-notice admits that the RTM company is entitled to acquire the right to manage, then the right is acquired on the date specified in the claim notice