Commonhold and Leasehold Reform: What the 2002 Act Means for Blocks of Flats

by | May 7, 2002 | Contract Administration and Major Works, Maintenance and PPM

On 1 May 2002, the Commonhold and Leasehold Reform Act 2002 received Royal Assent. For freeholders, managing agents, residents’ associations and leaseholders in blocks of flats, it was the most significant change to leasehold management for some years. Most of the Act was to be brought into force in stages by regulations, so there was time to prepare, but the direction was clear.

What the Act does

  • Commonhold. Part 1 creates a new form of tenure in which flat owners hold their own units freehold and together own and manage the common parts through a commonhold association.
  • The right to manage. Leaseholders in qualifying blocks would be able to take over management through a company of their own, without having to prove fault by the landlord.
  • Service charge consultation. The Act replaced the existing consultation provisions in section 20 of the Landlord and Tenant Act 1985 with a new framework, the detail of which was to follow in regulations.
  • Other leasehold changes. There are changes to enfranchisement and lease extension, and new protections for leaseholders on matters such as ground rent demands and forfeiture.

Why repair planning mattered more than ever

Whoever ends up managing a block, the building still needs looking after. A new right to manage company inherits the roof, the windows, the drains and the decorations, together with whatever has been put off. Freeholders who want to keep management, and leaseholders who want to take it over, both need to know the true condition of the building and the likely cost of keeping it in repair.

The new consultation framework was also likely to put more weight on doing things properly before major works start. Clear specifications, competitive tendering and good records would matter.

What freeholders and managing agents needed to do

  1. Commission a condition survey of the block if you have not had one recently.
  2. Use it to prepare a planned maintenance programme with costs over the coming years.
  3. Review the leases so that you understand what can be charged and how.
  4. Keep leaseholders informed. Openness now reduces disputes later.

See our Major Works and Planned Preventative Maintenance services, and how a later programme delivered major works across two mansion blocks.