What is Right to Manage and How to Apply

What is the Right to Manage?

The Right to Manage (RTM) is a statutory right that allows leaseholders to take over the management of their building from the freeholder, without having to prove fault or buy the freehold. It was introduced by the Commonhold and Leasehold Reform Act 2002 and applies in England (not Wales or Scotland).

When leaseholders exercise RTM, they form a special company — an RTM company — which takes on the management functions currently performed by the freeholder or their appointed managing agent. The RTM company can then either self-manage or appoint a managing agent of its own choosing.

RTM is a “no-fault” right: you do not need to prove that the current management is poor. You simply need to qualify and follow the correct procedure.

Who qualifies for RTM?

The eligibility criteria are set out in the 2002 Act. The main requirements are:

• The building must be a “self-contained building” or part of a building — it must be structurally detached or capable of being managed independently.
• At least two-thirds of the flats must be held by qualifying tenants — a “qualifying tenant” is a leaseholder with a long lease (originally granted for more than 21 years).
• The non-residential floor space limit — currently, no more than 25% of the total internal floor area can be non-residential (e.g. commercial units). The Leasehold and Freehold Reform Act 2024 raises this to 50% once in force.
• Participation threshold — the RTM company must have members who hold at least half the total number of flats in the building.
• No existing RTM — only one RTM claim can be in progress for a building at any time. If the building is already managed by an RTM company, a new claim cannot be made (but the existing RTM company can be replaced through its own governance procedures).

What does the RTM company manage?

Once the RTM company acquires management, it takes on the landlord’s management functions, including:

• Setting and collecting service charges.
• Arranging and supervising maintenance, repairs, and major works.
• Managing the building insurance (though the freeholder may retain the right to insure in some cases).
• Managing communal areas, cleaning, and gardening.
• Enforcing lease covenants (other than forfeiture, which remains with the freeholder).
• Granting approvals required under the lease (e.g. for alterations), though the freeholder must be consulted on certain matters.

The freeholder retains ownership of the building and remains entitled to ground rent (if any). The RTM company does not acquire the freehold.

The RTM process: step by step

1. Set up the RTM company

The RTM company must be a private company limited by guarantee, registered at Companies House. Its articles of association must comply with the requirements of the 2002 Act. Template articles are available from Companies House and from organisations like LEASE.

All qualifying tenants in the building are entitled to be members. The freeholder is also entitled to be a member (but not to outvote the leaseholders).

2. Recruit members

You need qualifying tenants holding at least half the total flats in the building to be members of the RTM company before you can serve the claim notice. This is often the most time-consuming step — you need to identify all leaseholders, explain RTM, and persuade enough to join.

3. Serve a Notice of Invitation to Participate

Before serving the formal claim notice, you must send a “Notice of Invitation to Participate” to every qualifying tenant who is not already a member of the RTM company. This notice must give at least 14 days for recipients to join. It must include prescribed information about the RTM company and the right to manage.

4. Serve the Claim Notice

The RTM company serves a formal “Claim Notice” on the freeholder (and any other relevant landlord or manager). This notice states that the RTM company intends to acquire the right to manage and specifies the date on which the RTM will take effect (the “acquisition date”). The acquisition date must be at least three months after the claim notice is given.

5. Counter-notice (or not)

The freeholder has one month from receiving the claim notice to serve a counter-notice. The counter-notice must either admit the claim (in which case RTM proceeds automatically) or deny it and state the grounds. Grounds for denial are limited to eligibility issues (e.g. the building does not qualify, insufficient members, procedural defects in the notice).

If the freeholder does not serve a counter-notice within the time limit, the RTM is deemed to be accepted.

6. Tribunal application (if disputed)

If the freeholder serves a counter-notice denying the claim, the RTM company must apply to the First-tier Tribunal (Property Chamber) within two months for a determination. If the Tribunal finds in favour of the RTM company, it will make an order that the right to manage is acquired.

7. Acquisition and handover

On the acquisition date, management responsibility transfers to the RTM company. The outgoing manager must hand over relevant documents, records, and funds (including service charge reserves). In practice, the handover period can take several weeks and requires careful planning.

Costs

One of the advantages of RTM over buying the freehold is that there is no premium to pay. However, there are costs to consider:

• Companies House fees — a small fee to register the RTM company (currently £12 online).
• Professional fees — many RTM companies use a solicitor to handle the notices and any Tribunal proceedings. Expect to pay £2,000–£5,000 for professional assistance with a straightforward claim.
• Freeholder’s reasonable costs — under the current law, the RTM company is liable for the freeholder’s reasonable costs of dealing with the claim (but not Tribunal costs if it goes to a hearing). The Leasehold and Freehold Reform Act 2024 limits this liability once in force.
• Ongoing management costs — once you have RTM, you will need to pay for management (either self-managing with volunteer directors or appointing a managing agent). Budget for this from the outset.

Common pitfalls

• Procedural defects — the RTM notice requirements are strict. Errors in the claim notice (wrong dates, missing information, incorrect company details) are the most common reason for claims to fail. Professional advice is strongly recommended for the notice stage.
• Insufficient members — make sure you have qualifying tenants holding at least half the flats before serving the claim notice. Re-count carefully, and don’t include tenants whose leases have expired or who don’t qualify.
• Not planning for the handover — acquiring RTM is just the beginning. You need a plan for how the building will be managed from day one: who handles emergencies, who collects service charges, who manages contractors.
• Underestimating the workload — self-management requires significant volunteer time. Many RTM companies choose to appoint a professional managing agent (of their own choosing) to handle day-to-day operations.

RTM vs. buying the freehold

Many associations start with RTM and consider collective enfranchisement later, once they have experience of managing the building and a better understanding of the costs involved.

Next steps

• If you don’t already have one, form a leaseholders association first — it’s the natural foundation for an RTM company.
• Identify all qualifying tenants in your building and check that the participation threshold can be met.
• Take professional advice early — a solicitor experienced in RTM can help you avoid costly procedural mistakes.
• Plan for life after acquisition: decide whether you will self-manage or appoint a managing agent, and start getting quotes.