Leaseholders in England & Wales to be given greater rights

Shared ownership leaseholders in the UK have been uncertain about their rights to the management of their buildings. A recent ruling by the Court of Appeal has cleared up this issue. This blog post discusses the case and its implications for shared ownership leaseholders.

The Court of Appeal recently heard the case, Avon Ground Rents Limited v Canary Gateway (Block A) RTM Company Ltd, in a dispute between the freeholder of a two-block development and tenants with shared ownership leases seeking to acquire the right to manage their block. The Law Commission had previously highlighted the lack of clarity in this area stating that the current right of shared ownership leaseholders to claim the right to manage was ambiguous.

To understand this case, it is essential to know the concept of “Staircasing”. Staircasing refers to the process where a shared ownership leaseholder gradually increases their share of the property and reduces rent payments.

In a report for the government in 2020, the Law Commission pointed out that case law regarding shared ownership leaseholders who had not Staircased to 100% was conflicting. They stated that the current legislation, the Commonhold and Leasehold Reform Act 2002, lacked clarity on shared ownership leaseholders’ right to manage.

In the Court of Appeal’s ruling, Lord Justice Newey emphasised that shared ownership leaseholders who have not reached the 100% ownership mark still have a significant interest in the management of the premises. Lord Justice Newey concluded that a shared ownership leaseholder with a lease exceeding 21 years should be considered a long leaseholder under section 76 of the act, regardless of their ownership percentage.

The right to manage is just one aspect of the ongoing leasehold and commonhold reforms being explored by the UK government. The minister for housing Rachel Maclean stated the government’s commitment to facilitating the process for leaseholders to take control of their building management in response to a written parliamentary question in March.

The recent Court of Appeal ruling has provided much-needed clarity regarding shared ownership leaseholders’ right to manage their buildings. The decision recognises that shared ownership leaseholders, even those who have not Staircased to 100%, have a legitimate interest in the management of their premises. This ruling marks a positive step towards empowering leaseholders and ensuring fair and transparent management practices in shared ownership properties. As the government continues to explore leasehold reforms, it is expected that further changes will be made to strengthen the rights of leaseholders across the country.

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