If you own a leasehold property, you are usually responsible for maintaining the internal parts of your flat, but you are also likely to be granted the right to use “common parts” of the building i.e. those parts of the block that are not contained in a residential ‘unit’ but which are necessary for you to access, use and enjoy the premises.
The freeholder will have responsibility for the structure of the building, including any repairs, maintenance and insurance. They will also have responsibility for maintaining any common parts and will recover the costs incurred for maintaining such areas from leaseholders via the service charge.
Leaseholders have rights over common parts of their building, the details of which will be included in the lease. A common part will be any area that may be used by the residents in common, such as stairwells, lifts and entrance halls, emergency fire exists, and potentially garages, gardens, communal areas and gym facilities.
From time to time, leaseholders may wish to exercise their right to take over the management of their block, including taking responsibility for the maintenance of any common parts. Leaseholders can take over control of the management of communal areas/common parts of their block by exercising either the right to collective enfranchisement or the Right to Manage.
Buying the freehold and common areas
Collective enfranchisement is a statutory right for the leaseholders to come together to collectively buy the freehold of that building. Leaseholders that meet the criteria set out in the Leasehold Reform, Housing and Urban Development Act 1993 can compel the freeholder to sell the freehold, including any common parts, to a group of qualifying leaseholders.
A collective enfranchisement claim can include leases of any common parts of the relevant premises, the acquisition of which is necessary for the proper management or maintenance of those common parts (see section 2(3) of the 1993 Act). Common parts are defined as including the structure and exterior of the building and any common parts within it (see section 101 of the 1993 Act).
Provided at least 50% of the flats in the building are qualifying tenants and choose to participate, the collective enfranchisement claim can proceed. In terms of common parts, in the case of LM Homes Ltd and Others v Queen Court Freehold Company Ltd [2002] EWCA Civ 371, the leaseholders successfully argued that they should be entitled to acquire leases of the airspace, subsoil and parts of the basement of the relevant premises, having exercised the right to collective enfranchisement.
One thing that should be borne in mind is that although the 1993 Act will allow common areas to be claimed, if they are shared then the freeholder can retain these and grant the new freehold company rights similar to those enjoyed under the leases over these areas. That means that whilst the areas can be claimed it should not be assumed that they will have to be transferred automatically. This can be particularly relevant where one or more blocks or buildings share services.
Finally, any areas inside the building (such as lifts, stairways etc) will automatically be included in the claim as they form part of the building.
The Right to Manage and areas outside the building
Meanwhile, the Right to Manage allows leaseholders to take over management of their building and appoint a new manager by forming a Right to Manage company. To qualify, the building must meet certain conditions, such as that: a minimum number of leaseholders are required to take part, including that at least two-thirds of the flats must be let to ‘qualifying tenants’; and that the non-residential part must not exceed 25% of the total floor area, excluding common parts, although the law on this is set to change when the reforms under the Leasehold and Freehold Reform Act 2024 come into effect. When this happens the threshold for non-residential parts will rise to 50% meaning that more blocks can claim the right to manage.
If they’re successful, the freeholder will still own the building, but the leaseholders can usually take over the responsibility for managing it, including:
- collecting and managing the service charge
- upkeep of communal areas (such as communal hallways and stairs)
- upkeep of the structure of the building (such as the roof)
- dealing with complaints about the building from other leaseholders
However, the Supreme Court’s ruling in FirstPort Property Services Ltd v Settlers Court RTM Company and others, overturned the previous decision of the Court of Appeal in Gala Unity Ltd v Ariadne Road RTM Company Ltd [2012] EWCA Civ 1372 and held that a right to manage company did not acquire the right to manage the estate surrounding the block of flats. Overturning the judgments of both the First-Tier Tribunal and the Upper Tribunal, the Supreme Court ruled that granting the RTM Company the right to perform the management of the shared estate would produce “absurd and unworkable” results and that the right to manage does not extend to shared estate facilities as these would not fall within the meaning of “premises”.
Following the Settlers Court decision, the exercise of the right to manage in respect of one block does not extend to the RTM Company managing the wider shared estate and its facilities. As such, an RTM Company cannot take control of estate common parts outside the property where there are areas shared with other blocks. Under the current law, the RTM Company will only exercise management functions which relate to residential units, common parts, and in some cases appurtenant property of the premises, i.e. nearby physical property (such as a garage) over which the occupants of the relevant building (or part) had exclusive rights.
Your lease will include details of the rights that are granted to you with the property, including access over common parts and rights of way (easements). If you are interested in purchasing a leasehold property, it is essential that you have a clear idea of what parts of the building outside of your flat you can use and on what terms. It is vital that you make sure you know what access to and/or maintenance of any common parts will cost you via the service charge. It also goes without saying that it is vital to ensure that your representatives are advise on questions like these.
If you are exploring your options to exercise your rights to collective enfranchisement or the right to manage, it is crucial to ascertain which common parts of the block you are entitled to and which parts will remain the property of the freeholder, as ownership of some shared areas will not automatically transfer to the leaseholders.
Mark Chick
28.1.2025
