New statutory duties concerning Tenants Associations from 1st November 2018

The Tenants Association (Provisions Relating to Recognition and Provision of Information) England Regulations 2018 (SI2018/1043) are coming into force (on 1 November 2018) (“the Regs”).

Tenants’ associations can be hugely beneficial to long leasehold residential tenants. An association can act on behalf of, and represent, the tenants in all matters of common interest to the tenants of the building. For example; when either the landlord or tenants need to negotiate a variation of leases; when the landlord seeks to sell the freehold to a third party and tenants’ rights of first refusal become relevant; when the tenants intend to purchase the freehold; and when the tenants need to liaise with the landlord/management company in respect of day to day property management issues like nuisance neighbours, leaks, fire safety concerns, and roof repairs.

Getting Recognised  – the benefits

However,  tenants’ association that has been formally “recognised” – either by notice from the Landlord or a certificate from the First Tier Tribunal (Property Chamber) – becomes a Recognised Tenants’ Association “RTA”) and gains the benefit of significant statutory rights. For example, when it comes to service charges the RTA must be consulted by landlords (along with the individual tenants) and can play an active and influential part in the process on behalf of its members. The RTA can also:-

•  seek information from the landlord concerning the service charges and costs incurred
• inspect the relevant information made available
• appoint a qualified surveyor to advise it on matters related to the service charges and
• be consulted when the landlord seeks to engage managing agents.

Getting Recognised – the process

All qualifying tenants have a statutory right to ask for a tenant’s association to be recognised, but it must satisfy the requirements. The current position is that at least 60% of qualifying tenants in the building must be members of the association.

RTAs are nothing new: the definition of an RTA is contained within the Landlord and Tenant Act 1985 and the current qualifying criteria is set out within guidelines that date back to 1980. However, it is surprising in practice that more RTAs do not exist.

In 2017 the Ministry of Housing Communities and Local Government ran a consultation in respect of the statutory procedure for a tenants’ association becoming formally “recognised”, with emphasis on an RTA’s (new) power to request information about potential qualifying tenants. There has long been criticism that, owing to a lack of information about the potential qualifying tenants of a building, associations are unable to invite those tenants to join the association and as a result fail to pass the 60% threshold to gain ‘recognised’ status. In a ‘post-Grenfell’ era the government, as well as long residential leaseholders, are keen for RTAs to exert their statutory rights in respect of service charges to ensure that buildings are being managed responsibly, and effectively, by landlords and management companies.

The Regs set out the process by which a secretary of a tenant’s association may seek information concerning the qualifying tenants and the steps the landlord must take in order to provide the same and comply with its statutory duty. Mindful of the burgeoning Data Protection environment, following the initial request for information, the landlord must seek consent from the individual tenants before their details may be passed to the tenants’ association. This is potentially burdensome, but if the landlord fails to engage, an application can be made to the Tribunal for an order compelling the landlord to comply.

The Regs reduce the threshold of the qualifying criteria from 60% to 50% of “qualifying tenants of dwellings situated in the premises”. The Regs also provide that where there is an association with less than 50% of qualifying tenants the Tribunal will be able to disapply the threshold if the association “represents a substantial number of qualifying tenants’ dwellings”. The Regs have clearly sought to address the issue raised in the case of Rosslyn Mansions v Winstonworth Ltd [2015] UKUT 0011 (LC) where there were less than 60% qualifying tenants in an association seeking recognition, but the members were responsible for over 70% of the service charges payable in respect of the building. The Regs give the Tribunal the discretion to recognise a tenant’s association even if does not satisfy the new lower threshold.

The Regs demonstrate that the government wants to promote and encourage tenants’ associations achieving formal recognised status so they may use their wider-ranging statutory powers to scrutinize the management of buildings by landlords and protect the interests of residential long leaseholders. It will be interesting to see whether tenants will take advantage – as they should – of the changes.

FSP can help both landlords and tenants to deal effectively with their rights and obligations under the changed regime. If you would like further information please contact Mark Banham: [email protected].