Schedule 7: Right to Manage: Statutory Provisions (Section 102)
319.Schedule 7 makes consequential changes to existing rights and duties to make them applicable where the RTM company has acquired the right to manage.
320.Paragraph 1 provides that the requirements on a landlord in section 19 of the Landlord and Tenant Act 1927 not to unreasonably withhold certain consents required under a lease apply to a RTM company where those consents are required to be given by the company by virtue of section 98.  The company is, however, entitled to make its consent conditional upon the receipt of their reasonable costs incurred in deciding whether to give that consent.
321.Paragraph 2 provides that the duty of care placed on a landlord by section 4 of the Defective Premises Act 1972 becomes a duty of care on the RTM company.  This has the practical effect of making the company responsible for ensuring that the property is kept in a sufficient state of repair not to present a threat to public safety.  Any liability arising from a failure to keep the property in good repair would therefore fall upon the company.
322.Paragraph 3 provides that the obligation placed upon a landlord of a short lease under section 11 of the 1985 Act becomes an obligation of the RTM company insofar as that obligation applies to the common parts and fabric of the premises, but not insofar as it applies only to the individual unit demised under that lease.  It also provides that a RTM company will be under the same obligation to anyone who occupies a unit in the premises without having a lease of that unit (e.g. a resident freeholder) as it would be to any tenant with a short lease by virtue of the application of section 11 of the 1985 Act.  This will have the practical effect of placing the company under an obligation to tenants under short leases and to residents with no leases to maintain the structure and exterior of the building and the installations for heating and sanitation and for the supply of water, electricity and gas.
323.Paragraph 4 provides that the rights enjoyed by tenants in respect of service charges under sections 18 to 30 of the 1985 Act can be exercised against a RTM company by any tenant and any landlord who is required to pay a service charge to the RTM company by virtue of the provisions governing the right to manage.  These rights are: the right to challenge the reasonableness of service charges; the right to be consulted on major works (as amended by section 151 of the Act); the rights to receive statements of account and to access other documents relevant to service charges (as introduced by sections 152 and 154 of the Act); and the right to establish a recognised tenants’ association.
324.Paragraph 5 provides that the rights enjoyed by tenants in respect of insurance by virtue of section 30A of the 1985 Act can be exercised against a RTM company by any tenant and any landlord.  These rights are: the right to information on insurance and the right to challenge a nominated insurer.
325.Paragraph 6 provides that the right enjoyed by a recognised tenants’ association to be consulted about the choice of managing agent by virtue of section 30B of the 1985 Act can be exercised against a RTM company.
326.Paragraph 7 provides that where the landlord serves an offer notice on qualifying tenants under the right of first refusal granted by Part 1 of the 1987 Act, a copy of that notice must also be served on the managing company.  This will allow consideration of whether the company should be used as the vehicle for accepting the offer.
327.Paragraph 8 provides that the right enjoyed by tenants of flats to seek the appointment of a new manager under Part 2 of the 1987 Act can be exercised against the RTM company by any tenant of a flat and any landlord.  It will be possible to make an order appointing a new manager against a RTM company on the same grounds as apply for appointing one against a landlord.  In addition, an order can be made against a RTM company where it fails to fulfil any of its obligations in respect of granting approvals or monitoring covenants, or where the company wishes itself to be replaced as manager.  Furthermore, this power will include a power to order that the right to manage is no longer exercisable by the RTM company concerned and to make ancillary provisions.
328.Paragraph 9 provides that where the right to manage has been exercised, the right of tenants to compulsorily acquire their landlord’s interest under Part 3 of the 1987 Act is disapplied.  That is because the right of compulsory acquisition is exercisable on the basis that the landlord is at fault, and it is therefore not appropriate for tenants to be able to exercise it where the landlord has been replaced as manager on a ‘no fault’ basis.
329.Paragraph 10 provides that the RTM company is able to exercise the rights to seek variation of a lease granted to individual tenants of flats, and to landlords of those tenants, under Part 4 of the 1987 Act  (but not the right of groups of tenants to seek variations under that Part).
330.Paragraph 11 provides that the requirements to hold service charges in trust and in designated client accounts under sections 42 to 42B of the 1987 Act (see section 156) apply to any monies paid to the RTM company by either a tenant or a landlord.
331.Paragraph 12 provides that the company is bound by the requirement under section 48 of the 1987 Act to provide tenants with an address at which notices can be furnished.  The company will also have to provide all landlords with such an address.  In addition, the company will be bound by the requirement under section 47 of that Act to include its name and address in any written demand for money.
332.Paragraph 13 provides that the company is bound by the requirements of the Landlord and Tenant Act 1988 not to unreasonably withhold certain consents.  This in turn allows a tenant to bring civil proceedings against the company where he or she believes that the company has not complied with its duties under that Act.
333.Paragraph 14 provides that the right of tenants to arrange for a management audit under Chapter 5 of Part 1 of the 1993 Act can be exercised against a RTM company by a tenant or by any landlord who is required to pay a charge to the company.
334.Paragraph 15 provides that the right of a registered tenants’ association to appoint a surveyor under section 84 of the Housing Act 1996 will apply against a RTM company as it does against a landlord.
335.Paragraph 16 provides that the rights of a tenant in respect of variable administration charges as set out in Schedule 11 are applicable against a RTM company.  It also provides that the RTM company may exercise the right to seek the variation of a fixed administration charge.