Shared Ownership Leases Entitled to Right to Manage

The Court of Appeal has decided in Avon v Canary Gateway (Block A) RTM [2023] EWCA Civ 616 that leaseholders with shared ownership leases are entitled to participate in the right to manage their buildings, even if they own less that 100% of their property.

This is an important decision for leaseholders that wish to manage their buildings and may also have further reaching implications because the definitions discussed are so similar to those that provide leaseholders with the right to collectively enfranchise under the The Leasehold Reform, Housing and Urban Development Act 1993.

The Court of Appeal’s Decision 

Under the Commonhold and Leasehold Reform Act 2002 (“the Act”), qualifying tenants are entitled to acquire the right to manage their building. The Act defines a qualifying tenant as a tenant of a “flat under a long lease”. Section 76 of the Act states:

“(2) Subject to section 77, a lease is a long lease if—

(a) it is granted for a term of years certain exceeding 21 years, whether or not it is (or may become) terminable before the end of that term by notice given by or to the tenant, by re-entry or forfeiture or otherwise,

(b) it is for a term fixed by law under a grant with a covenant or obligation for perpetual renewal (but is not a lease by sub-demise from one which is not a long lease),

(c) it takes effect under section 149(6) of the Law of Property Act 1925 (c. 20) (leases terminable after a death or marriage or the formation of a civil partnership),

(d) it was granted in pursuance of the right to buy conferred by Part 5 of the Housing Act 1985 (c. 68) or in pursuance of the right to acquire on rent to mortgage terms conferred by that Part of that Act,

(e) it is a shared ownership lease, whether granted in pursuance of that Part of that Act or otherwise, where the tenant’s total share is 100 per cent., or

(f) it was granted in pursuance of that Part of that Act as it has effect by virtue of section 17 of the Housing Act 1996 (c. 52) (the right to acquire).”

The Court of Appeal decided that a lease will be a long lease if any of the paragraphs (a) to (f) of section 76(2) applies. Therefore, where a shared ownership lease is granted for a term exceeding 21 years it will fall within the requirement at (a) and therefore compliance with (e) will not be necessary.

"Tenants with long shared ownership leases who have not staircased to 100% will still have an obvious interest in how the premises are managed, the more so since they will typically pay full service charges. That being so, Parliament might have been expected to have intended them to be able to participate in management issues" Lord Justice Newey

https://www.tanfieldchambers.co.uk/2023/05/30/avon-ground-rents-v-canary-gateway-block-a-rtm-court-of-appeal-confirms-rights-of-200000-shared-ownership-leaseholders/
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