Right to Manage

The Right to Manage (RTM) is a statutory right established under Part 2 of the Commonhold and Leasehold Reform Act 2002. It allows a qualifying group of leaseholders to take over the management of their building from the landlord — without needing to prove any fault on the landlord's part, and without purchasing the freehold. RTM is a no-fault right.

RTM does not transfer ownership of the building. The freeholder retains ownership of the freehold. What transfers, on the acquisition date, is the right to manage: the ability to appoint and remove managing agents, arrange maintenance and repairs, collect service charges, and discharge the functions exercised by or on behalf of the landlord under the lease. The RTM company — a limited company formed by the qualifying leaseholders — holds those functions from that date.

Who Qualifies: Building Criteria

The building must meet the following criteria for RTM to apply. It must be a self-contained building or self-contained part of a building. It must contain at least two flats held by qualifying tenants. At least two-thirds of all the flats in the building must be held by qualifying tenants.

Prior to 3 March 2025, the non-residential floor area limit was 25%: only buildings where non-residential use (excluding common parts) did not exceed 25% of total internal floor area were eligible. Under section 49 of the Leasehold and Freehold Reform Act 2024 (in force from 3 March 2025), this limit was raised to 50%. Buildings in which non-residential areas exceed 50% of total internal floor area remain excluded from RTM.

Buildings that do not qualify include those where the freehold is held by a resident landlord in a building converted from a single house containing no more than four units and where the landlord occupies part of the building as their only or principal residence.

Who Qualifies: Leaseholder Criteria

A qualifying tenant is a leaseholder whose lease was originally granted for a term of more than 21 years. The right to manage does not require the leaseholder to occupy the flat — qualifying tenants include investors and buy-to-let landlords as well as owner-occupiers. A leaseholder is not a qualifying tenant if their lease was granted by the RTM company itself.

For the RTM company to serve a valid Notice of Claim, at least 50% of the qualifying tenants in the building must be members of the RTM company at the time the notice is served. Where a building contains only two qualifying tenants, both must be members. A flat held by two or more qualifying tenants counts as one qualifying tenant for the purposes of calculating the 50% threshold.

The RTM Company

An RTM company is a private company limited by guarantee, incorporated under the Companies Act 2006 with articles of association in the prescribed form set out in the RTM Companies (Model Articles) (England) Regulations 2009. The company must be incorporated specifically for the purpose of acquiring and exercising the right to manage the building — an existing company cannot serve as an RTM company for these purposes.

The RTM company is incorporated at Companies House in the usual way, using the prescribed articles. Qualifying tenants of flats in the building are eligible to be members. The landlord is not a member during the claim process but has a statutory right to become a member of the RTM company once the right to manage is acquired. The RTM company must be formed before the Notice of Claim is served; its incorporation number and registered details must appear on the notice.

Notice of Claim

Once the RTM company has been incorporated and at least 50% of qualifying tenants are members, it may serve a Notice of Claim on the landlord, any third party who has obligations under the leases in the building, and any other person who would be a landlord under those leases. The Notice of Claim must contain prescribed particulars, including the name and registered address of the RTM company, the address of the building, the names of the participating members, and the date — not less than one month from the date of service — by which the landlord must respond.

The landlord has one month from service of the notice to serve a counter-notice. A counter-notice may admit the claim, in which case the RTM company acquires management functions on the date specified. A counter-notice may dispute the claim on the grounds that one or more of the qualifying criteria are not met — for example, that the building does not qualify or that insufficient qualifying tenants are members. If the landlord disputes the claim, the RTM company may apply to the First-tier Tribunal for a determination.

If the landlord serves no counter-notice within the one-month period, the claim is treated as admitted. The acquisition date is one month after the date specified in the notice (or a later date agreed between the parties), and management functions transfer on that date without further steps.

What Happens After RTM Is Acquired

On the acquisition date, management functions transfer to the RTM company. The existing managing agent's appointment under the landlord's authority ends. The RTM company may appoint its own managing agents or manage the building directly. Any management contracts entered into by the landlord before the acquisition date — unless novated to the RTM company — will need to be considered as they come up for renewal.

Functions that transfer include the day-to-day management of the building, the collection and administration of service charges, the maintenance of common parts, and the placing of buildings insurance. The RTM company takes on responsibility for Section 20 consultation on major works and compliance with the Landlord and Tenant Act 1985 service charge framework.

Functions that do not transfer include obligations that remain personal to the landlord under the individual leases — for example, the landlord's obligation to repair the structure or external envelope where those obligations are expressly reserved to the landlord rather than falling within the service charge regime. The landlord retains those obligations and must discharge them. The landlord also has the right to become a member of the RTM company following acquisition, and must be admitted as a member on application.

Changes Under the Leasehold and Freehold Reform Act 2024

The Leasehold and Freehold Reform Act 2024 made three significant changes to the RTM regime, all of which came into force on 3 March 2025 under SI 2025/131 (Commencement No. 3).

The non-residential floor area threshold was raised from 25% to 50% under section 49. Mixed-use buildings in which non-residential areas make up between 25% and 50% of total internal floor area now qualify for RTM where they would not have previously. Buildings where non-residential areas exceed 50% remain excluded.

The default position on landlord cost recovery was reversed under section 50 and section 64. Previously, an RTM company and its members were liable for all costs incurred by the landlord as a consequence of service of a claim notice. Under the amended provisions, that liability no longer applies unless a court or tribunal makes a specific order. Permitted costs remain recoverable only where ordered by the tribunal in specified circumstances.

Section 51 introduced compliance provisions relating to obligations arising under Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002. Section 52 provided that first-instance applications in RTM proceedings must be made to the First-tier Tribunal rather than the High Court. See Reform Tracker for the current status of other LFRA 2024 provisions that may affect RTM in due course.