Shared ownership leaseholders qualify for Right to Manage

The Commonhold and Leasehold Reform Act 2002 provides the right for certain residential leaseholders to acquire the management of their block of flats. Leaseholders do not have to pay a premium and are entitled to exercise this right even if there is no fault in the present management. However, there had previously been uncertainty as to whether shared ownership leaseholders qualified for this Right to Manage.

The recent case of Avon Ground Rents Ltd v Canary Gateway (Block A) RTM Company Ltd & Anor (2020) UKUT 358 (LC) has provided further clarification on the point, confirming that shared ownership leaseholders qualify for the right even where they have a less than 100% share. This was decided on the basis that shared owners have a lease of more than 21 years, being one of the other qualifying gateways under the legislation. The case also confirmed that a housing association owning a number of socially rented residential flats under a headlease, also qualified for the right to manage and must be served with the notice of invitation to participate in the right to manage.

The Law Commission's recent proposals to reform the Right to Manage are based on the objective of expanding the right to more properties. This decision echoes those intentions (albeit the ruling was based purely on principles of statutory interpretation). It could also have wider implications as to whether shared ownership leaseholders qualify for lease extensions or collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993, because the 1993 Act contains the same gateway provisions.