Legal Glossary

Key legal terms and concepts for understanding leasehold disputes and Right to Manage campaigns.

This glossary defines the critical legal terms and statutory rights referenced throughout this campaign. Understanding these concepts is essential for navigating the leasehold dispute and RTM process effectively.

Commonhold

A system of property ownership where unit holders own the freehold of their individual flats outright and collectively manage the communal areas through a Commonhold Association.

Eliminates leasehold decay: No more decreasing lease lengths affecting property values
Abolishes ground rent: No ongoing payments to a landlord
Permanent ownership: Full control over your property asset
Democratic management: All owners have equal voting rights

Commonhold was introduced in the Reform Act 2002 but has seen limited adoption due to legal complexity. The Draft Leasehold and Commonhold Reform Bill (2026/27) aims to make conversion significantly easier.

First-tier Tribunal (FTT) - Property Chamber

The independent judicial body in England and Wales that resolves leasehold disputes without requiring expensive court proceedings.

The FTT can determine:

Whether service charges are reasonable (Section 27A)
Whether landlords have complied with consultation requirements (Section 20)
Applications to appoint a manager
Right to Manage disputes
Lease extension and enfranchisement valuations

Key advantages:

Lower costs than court litigation
Specialist panel judges with property law expertise
Decisions are legally binding and enforceable

Peppercorn Lease / Peppercorn Ground Rent

A lease where the ground rent is set to a nominal, effectively uncollectable amount (historically described as "one peppercorn per year").

Legal significance:

The freeholder extracts no income from ground rent
Reduces the freehold value to near-zero for buyout purposes
Modern peppercorn leases typically state "£0 if demanded" in the lease document

The Ground Rent Act 2022 mandated peppercorn ground rents for most new leases granted after June 2022. Older leases with escalating ground rents remain problematic.

Right to Manage (RTM)

A statutory right under the Commonhold and Leasehold Reform Act 2002 allowing leaseholders to take over the landlord's management functions without proving fault or paying compensation.

Key requirements:

At least 50% of qualifying leaseholders must participate
Building must be a "self-contained part" (structurally independent)
No more than 25% of the building can be commercial space
Proper RTM company must be formed with prescribed Articles of Association

What transfers to the RTM Company:

Maintenance and repair obligations
Insurance arrangements
Communal service contracts (cleaning, lifts, etc.)
Management of reserve/sinking funds

What does NOT transfer:

Freehold ownership (landlord keeps this)
Enforcement of lease covenants
Grant of lease extensions
Structural alterations requiring freeholder consent

Timeline: Typically 3-5 months from formation to takeover, assuming no challenge from the landlord.

Section 20 - Major Works Consultation

A protection under the Landlord and Tenant Act 1985 requiring landlords to formally consult leaseholders before undertaking major works or entering into long-term agreements.

Triggers Section 20 if:

Any single leaseholder would be charged more than £250 for the works
A qualifying long-term agreement (12+ months) is being entered

Consultation stages:

Notice of Intention: Landlord describes the works and invites observations (30 days)
Estimates Stage: At least 2 estimates provided, leaseholders can nominate contractors (30 days)
Notice of Reasons: Landlord explains choice of contractor and addresses observations

Failure to consult properly: Leaseholders' liability is capped at £250 per flat, regardless of actual costs.

Southern Housing's £1.7 billion mega-contract across 23,000 homes triggers Section 20. Leaseholders have the legal right to submit written observations and nominate alternative local contractors during the consultation period.

Section 20B - The 18-Month Rule

A statutory protection preventing landlords from charging leaseholders for costs incurred more than 18 months ago, unless the landlord issued a Section 20B notice within that timeframe.

The rule:

Landlord incurs costs (e.g., repairs completed in January 2024)
Landlord has until July 2025 (18 months) to either:
- Issue a service charge demand, OR
- Serve a Section 20B notice stating the costs and reserving the right to charge later

If the landlord misses this deadline: The costs become unrecoverable. Leaseholders cannot be charged.

Critical to Odyssey House: The £1.2M historic charge notice is a Section 20B reservation of charges for works incurred in 2024/25. This does NOT mean the charges are valid or reasonable—only that Southern Housing preserved their right to claim them. These charges can still be challenged via Section 27A.

Section 22 - Right to Inspect Accounts

A statutory right under the Landlord and Tenant Act 1985 allowing leaseholders to demand access to financial records and supporting invoices.

What you can request:

Summary of service charge costs for the accounting period
Inspection of receipts, invoices, and contracts supporting those costs
Certification by a qualified accountant (if required by your lease)

Landlord obligations:

Must provide the summary within 1 month of request (or 6 months after the accounting period ends, whichever is later)
Must allow inspection within 30 days of providing the summary
Must provide copies of documents at reasonable cost

Penalties for non-compliance:

Failure to comply is a summary criminal offence
Service charges remain payable but can form basis for FTT application
Persistent non-compliance can support application for appointment of a manager

Section 22 is your legal weapon for exposing inflated charges and undelivered services. If Southern Housing refuses to provide receipts for "Electric Power Points" or "Fire System Servicing," they are committing a statutory offence.

Section 27A - Reasonableness Challenge

A provision under the Landlord and Tenant Act 1985 allowing leaseholders to apply to the First-tier Tribunal for a determination of whether a service charge is:

Reasonably incurred
Of a reasonable standard
Actually payable under the lease terms

Use cases:

Challenging inflated or unnecessary costs
Disputing charges for services not provided
Questioning the quality of works or services
Challenging Section 20B historic charges

Evidence needed:

Section 22 financial documentation
Photographic evidence of poor service
Alternative quotes from independent contractors
Timeline of service failures and complaints

Outcomes:

Tribunal can reduce or disallow charges entirely
Tribunal can order refunds if charges already paid
Landlord may be ordered to pay your legal costs if they acted unreasonably

A Section 27A application is your primary legal defence against the £1.2M historic charge. The application forces Southern Housing to prove the costs were reasonable and necessary—not just that they reserved the right to charge them.

Reserve Fund / Sinking Fund

Money collected from leaseholders in advance to build up reserves for future major works (e.g., roof replacement, exterior decoration, lift renewal).

Legal status:

The money is held on trust for the leaseholders
It is not the landlord's property
Upon RTM acquisition, the landlord must reconcile and transfer the fund to the RTM Company

Common issues:

Landlords refusing to provide statements of the fund balance
Delays in transferring the fund after RTM acquisition
Commingling of reserve funds with landlord's own accounts

Assume hostility: Southern Housing will likely drag their feet for months before transferring Odyssey House's sinking fund (estimated £7,000+). RTM companies must establish a "seed fund" (e.g., £150 per flat) to cover Day 1 costs like building insurance and emergency repairs while waiting for the transfer.

Leasehold and Commonhold Reform Bill (Draft 2025/26)

Proposed legislation aimed at making commonhold conversion significantly easier and more accessible.

Key proposed reforms:

50% threshold for commonhold conversion (down from current 100% unanimity)
Capped conversion costs to prevent freeholder overcharging
Streamlined buyout process with statutory valuation formulas
Mandatory offering of commonhold for new builds
Enhanced RTM rights with stronger protections against frivolous landlord challenges

Current status: The bill was introduced in 2025 but has not yet passed into law. Timeline for Royal Assent is uncertain and subject to political priorities.

Manage expectations: While the reforms are promising, legislative delays are common. Frame commonhold as the "North Star" goal, but ensure your RTM acquisition creates a sustainable, permanent solution regardless of whether the bill passes.

Summary Offence

A criminal offence tried in a Magistrates' Court without a jury, typically carrying lower penalties than "indictable offences."

In leasehold law, landlord failures to comply with statutory obligations (e.g., Section 22 financial disclosure) are classified as summary offences.

Penalties typically include:

Fines up to £5,000
Does NOT result in imprisonment for first-time offences
Does NOT automatically void the service charge (but strengthens FTT applications)

Strategic use:

Threatening to report summary offences can prompt compliance
Actual reporting can be made to local Trading Standards or the council
Evidence of repeated summary offences supports applications for appointment of a manager

Shadow Board

An interim, volunteer group of residents (usually 3-5 leaseholders or shared owners) elected to spearhead the building takeover before legal control is officially transferred.

Pre-Takeover: They incorporate the RTM company, handle the seed fund, serve the Notice of Claim, and interview independent managing agents.
Post-Takeover: Once the RTM is successful, they drop the "Shadow" title and become the official Board of Directors, entirely accountable to a democratic resident vote.