A new lease of life: - CentreForum

A New Lease of Life::6 – Leaseholder empowerment:longer term solutionsAn underlying problem of the leasehold system is that leaseholderspay for services but do not have control over who commissionsthem. The immediate solutions in Chapter 5 ensure thatleaseholders are given a greater voice in the management process,but the government should also seek to promote direct leaseholdempowerment. Giving leaseholders control of management placesthem at the heart of the process, which is preferable to simplylevering their interests into it. This can be done by taking the RTM,by enfranchising, or by using commonhold. We discuss how thegovernment can promote RTM and commonhold. 107Right to ManageRTM ensures that managing agents are legally accountable toleaseholders, by giving direct control to leaseholders to select theirmanagers. 108 Some leaseholder-appointed agents may still performbadly, but leaseholders are able to appoint a new manager withoutgoing to a tribunal. In this way it directly exposes managing agentsto competition.Collective enfranchisement offers similar benefits, but RTM hasdistinct advantages. First, leaseholders do not have to make anypayments to the freeholder in order to take control – they arenot buying anything, so only pay the administrative costs of theRTM application. Second, an RTM application generally faces lessfreeholder opposition than lease enfranchisement or extension107 We do not discuss enfranchisement in detail because the system is alreadyin place and there is little that can be done about the main barrier of raisingthe funds to purchase the freehold. By contrast, RTM offers similar benefits toenfranchisement without the costs.108 Leaseholders also have the right to ask a tribunal to appoint a new manager ifthey can show that their manager is deficient, but a new manager only has a legalrelationship with the tribunal, not with the leaseholders.64