How do tenants get to manage their own blocks?

Can tenants of shared ownership leases who do not own 100% of their lease, participate in a claim for the right to manage their block?  Following the recent Court of Appeal case of Avon Ground Rents Limited v Canary Gateway (Block A) RTM Company Ltd this question appears to have been answered.

The way in which tenants can increase their ownership share, which is called "staircasing" will eventually give the, the right to manage their own blocks. 

What is staircasing?

When a tenant of a shared ownership lease does not own 100% of that lease, they can increase their ownership share by purchasing a further share in the lease, which usually has to be at least 10% of the total. This increases the percentage owned by the tenant and is known as staircasing.

Shared ownership leases allow an individual to acquire a share in a lease and over time “staircase” to acquire further shares until they own the entire leasehold interest (or have staircased to 100%). There has previously been some question over whether a shared ownership lease that has not been staircased to 100% was deemed to qualify under the Commonhold and Leasehold Reform Act 2002.

Can I manage my own lease?

This will come down to how much of your lease you own. The freeholder in the above case had opposed a notice of claim to manage a block in a property in St Anne Street, in London. The block contained flats let under shared ownership leases and a question of whether the correct tenants had been served notice of the intention to claim a right to manage was raised.

It was held that tenants under shared ownership leases were indeed qualifying tenants and the shared ownership leases were long leases even though they had not staircased to 100%. The freeholder appealed.

The Court of Appeal held that: “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” and that “a tenant with a shared ownership lease “granted for a term of years certain exceeding 21 years” has a “long lease” within the meaning of section 76 of the [2002 Act regardless of whether the tenant has a 100% interest.”

This decision provides welcome clarification for tenants of shared ownership leases who wish to participate in a right to manage claim.

If you need advice about how to become a manager of your own leased property, we can help. 

Contact one of our expert property lawyers for a free discussion today.