Right to Manage — How Leaseholders Can Take Over the Management of Their Building

What Is the Right to Manage?

The Right to Manage (RTM) is a statutory right introduced by the Commonhold and Leasehold Reform Act 2002. It allows qualifying leaseholders in a building to take over the management functions from the freeholder or their managing agent — without needing to prove that the freeholder has mismanaged the building or done anything wrong. It is a no-fault right.

RTM transfers responsibility for the day-to-day management of the building, including maintenance, service charge collection, building insurance, and compliance with the lease obligations. It does not transfer ownership of the freehold.

Qualifying Criteria

Not every building qualifies. The RTM applies only where:

• **At least two-thirds of the flats are held on long leases** (originally granted for more than 21 years)
• **No more than 25% of the floor area is non-residential** (commercial units may disqualify a building if they make up more than a quarter of the total)
• **At least 50% of the qualifying tenants must participate** — you cannot exercise RTM with only a handful of leaseholders even if the building otherwise qualifies
• The building must be a self-contained building or part of a building

Purpose-built blocks of flats are typically the clearest case. Converted houses with multiple flats may qualify but require careful checking.

Forming the RTM Company

Before serving any notice, participating leaseholders must form a **Right to Manage Company**. This is a private limited company incorporated under the Companies Act 2006 with articles of association in a prescribed form (set out in the RTM Companies (Memorandum and Articles of Association) (England) Regulations 2003).

Every qualifying tenant has the right to become a member of the RTM company. Membership is open from the date the notice of invitation to participate is served. The freeholder also becomes a member of the RTM company after the right is acquired.

The Notice Process

1. **Notice of invitation to participate.** Before serving the formal claim notice, the RTM company must serve a notice on all qualifying tenants who are not already members, inviting them to join.

2. **Claim notice (the RTM notice).** At least 14 days after the participation notice, the RTM company serves a formal claim notice on the freeholder and any third party (such as a management company named in the leases). The notice must state the date on which the RTM company intends to acquire the right to manage, which must be at least three months after the claim notice.

3. **Counter-notice.** The freeholder has one month to serve a counter-notice. If they do not serve one, the RTM is acquired on the date stated in the claim notice. If they serve a counter-notice alleging that the RTM company does not qualify, the RTM company can apply to the First-tier Tribunal to determine the matter.

4. **Acquisition date.** Three months (minimum) after the claim notice, the RTM company acquires management functions and becomes responsible for all management obligations under the leases.

What RTM Companies Manage

Once RTM is acquired, the company is responsible for:

• Arranging and paying for building maintenance and repairs
• Collecting service charges and managing the service charge fund
• Procuring buildings insurance
• Complying with health and safety obligations (fire risk assessments, asbestos management, etc.)
• Enforcing lease obligations against other leaseholders

RTM companies do **not** collect ground rent (this remains with the freeholder) and do not manage individual lets or tenancy matters.

Costs and Ongoing Obligations

There is no premium payable to the freeholder to exercise RTM. The freeholder is entitled to recover their reasonable professional costs of the process (typically £1,500–£3,000). You will also need to budget for solicitor costs to set up the company and serve the notices (£2,000–£4,000 in most cases).

Ongoing, the RTM company directors (usually leaseholders themselves) take on significant legal obligations as company officers. Failure to manage the building properly can result in the RTM company losing its right to manage and the management reverting to the freeholder.

Property Passport UK records RTM company registrations and management history for leasehold buildings, supporting leaseholders in tracking who is responsible for their building’s management.