Right to Manage is one of the most powerful tools available to leaseholders in England. It allows the residents of a qualifying building to take over management from the freeholder — without buying the freehold, without proving the freeholder has done anything wrong, and without the freeholder's consent. Used correctly, it ends years of poor management, unexplained service charges, and deteriorating buildings. Used incorrectly — with procedural errors that invalidate the claim — it wastes months of effort and forces leaseholders to wait twelve months before they can try again.
This guide covers everything needed to exercise RTM successfully: whether your building qualifies, how to form the RTM company, the full claim process step by step, the Avon Freeholds Supreme Court decision that changed how RTM works in connected buildings, what happens on acquisition day, the costs involved, and the mistakes that derail claims most often. For leaseholders who are fed up with their current management and want to know whether RTM is the right route, this is the starting point.
In This Guide
- What Right to Manage Is — and What It Isn't
- Building and Leaseholder Eligibility
- Forming the RTM Company
- The Claim Process Step by Step
- Avon Freeholds: The Supreme Court Decision You Need to Know
- What Happens on and After Acquisition
- Costs of Exercising RTM
- RTM vs. the Alternatives
- Six Mistakes That Derail RTM Claims
- Frequently Asked Questions
What Right to Manage Is — and What It Isn't
Right to Manage is a statutory right created by the Commonhold and Leasehold Reform Act 2002. It gives qualifying leaseholders the right to take over the management functions of their building by forming a private company — the RTM company — and serving a formal claim notice on the landlord. Management transfers on a specified date, regardless of whether the landlord agrees.
RTM is specifically a management transfer, not an ownership transfer. Understanding the distinction is important before starting a claim.
- Responsibility for repair and maintenance of the building's structure and common parts
- Right to collect service charges from leaseholders
- Right to appoint and dismiss contractors and managing agents
- Responsibility for buildings insurance (placement and management)
- Obligation to conduct Section 20 consultations for qualifying works
- Day-to-day management decisions — access, communal rules, contractor instructions
- Ownership of the freehold — RTM does not transfer the land or building title
- Ground rent collection rights under individual leases
- Lease enforcement rights — breach of covenant, forfeiture proceedings
- Consent rights under leases — alterations, subletting, assignment (where the lease requires consent)
- Right to be consulted on Section 20 works as if they were a leaseholder of any non-residential units
The practical effect is that leaseholders gain control of how the building is run and what it costs them, while the freeholder retains their investment in the freehold itself. RTM does not affect the leases — each leaseholder's obligations to their individual landlord remain exactly as they were.
Unlike leasehold enfranchisement (buying the freehold), RTM does not require leaseholders to pay the freeholder anything. The freeholder receives no compensation for the loss of management rights. This is deliberate — Parliament's intention was to give leaseholders a meaningful remedy for poor management that did not depend on their ability to raise the capital to buy the freehold. The freeholder cannot oppose a valid RTM claim on the merits; they can only dispute whether the eligibility conditions are met.
Building and Leaseholder Eligibility
The building must qualify
Not every building is eligible for RTM. The Commonhold and Leasehold Reform Act 2002 sets out the conditions a building must meet.
- It is a self-contained building — it can be vertically divided from any other building or part of a building and managed independently
- It contains at least two flats held by qualifying tenants
- The total number of flats held by qualifying tenants is not less than two-thirds of the total number of flats in the building
- Non-residential floor area does not exceed 25% of the total internal floor area
- It is a converted house and the freeholder (or an adult member of their family) occupies a flat in the building as their only or principal home
- The building is not self-contained and cannot be managed independently
- Non-residential use exceeds 25% of total internal floor area
- Fewer than two-thirds of flats are held by qualifying tenants
- A previous RTM claim for the building was made in the last four years and the RTM company acquired the right but then ceased to be the RTM company
Leaseholders must be qualifying tenants
A qualifying tenant is a tenant of a flat under a long lease — a lease originally granted for more than 21 years. Most residential leaseholders will be qualifying tenants. You are not a qualifying tenant if you hold a business tenancy or a tenancy that is expressly excluded from the Landlord and Tenant Act 1954.
The participation threshold
At the time the claim notice is served, at least 50% of the total number of flats in the building must be held by qualifying tenants who are members of the RTM company. This is a strict requirement — it is not 50% of the leaseholders you can get hold of, or 50% of the ones who want to participate. It is 50% of all flats. In a 10-flat building, at least 5 leaseholders must be RTM company members. In a 20-flat building, at least 10.
The participation threshold is checked at the date the claim notice is served — not when you start the process. Leaseholders who join after that date do not count. If participation drops below 50% between the notice of invitation to participate and the claim notice, the claim is invalid. Keep membership records up to date and do not serve the claim notice until you are confident you have at least 50% signed up and that figure is stable.
Forming the RTM Company
The RTM company must be incorporated before any notices are served. It is a private company limited by guarantee — meaning members have no shares and are not liable for the company's debts beyond a nominal guarantee (typically £1). It must be incorporated using the prescribed articles of association for RTM companies set out in the Commonhold and Leasehold Reform Act 2002 (RTM Companies) (Model Articles) (England) Regulations 2009.
The company name must end in either "RTM Company Limited" or "Right to Manage Company Limited". Companies House will reject applications that do not follow this format. The company's registered address is typically the building itself or the solicitor's office handling the claim.
Every participating leaseholder becomes a member of the RTM company on joining. The company must have at least one director — in practice, usually two or three directors drawn from the participating leaseholders. The freeholder is also entitled to be a member of the RTM company after RTM is acquired (not before), though they have no vote on management decisions.
Once formed, the RTM company is a live legal entity with obligations under the Companies Act 2006 — filing annual confirmation statements, maintaining a register of members, holding meetings, keeping accounts. These are not optional. Directors who fail to meet Companies Act obligations can face personal liability. When considering RTM, factor in the ongoing compliance burden of running a company, not just the initial claim process.
The Claim Process Step by Step
Incorporate the RTM company at Companies House using the prescribed articles. Appoint directors from among the participating leaseholders. Gather initial members — typically the leaseholders who have organised the claim — before the formal process begins.
Before serving the claim notice, the RTM company must serve a Notice of Invitation to Participate (NIP) on every qualifying tenant who is not already a member. The NIP explains the right to participate, describes the building, and sets a participation deadline of not less than 14 days. Any qualifying tenant who wishes to join the RTM company can do so during this period.
The NIP does not need to be served on tenants who are already members, but it is good practice to document who received it and when. Serve by recorded delivery and retain proof of service for every leaseholder.
After the NIP period closes, count confirmed RTM company members. You need at least 50% of all flats in the building. If you are below 50%, you cannot proceed with the claim at this point. Options: continue recruiting, or wait and restart the NIP process. Do not serve the claim notice until you are above threshold with a comfortable margin.
The claim notice is the formal statutory document that initiates the RTM process. It must be served on the landlord (and any intermediate landlord, manager appointed by a court, and any person who has obligations under the leases relating to repair or maintenance). The claim notice must state:
- The full name and registered address of the RTM company
- The address of the building and a description of it
- The names of the RTM company members and the flats they hold
- A statement that the RTM company intends to acquire the right to manage
- The proposed acquisition date — which must be at least three months after the date of service
- A statement inviting the landlord to give a counter-notice within one month
The claim notice must be served by a solicitor on behalf of the RTM company, or by the company itself. Service errors — wrong address, wrong form, missing information — can invalidate the claim entirely.
The landlord must serve a counter-notice within one month of receiving the claim notice. The counter-notice must either admit the RTM company's right to manage, or allege specific grounds on which the right cannot be exercised — typically that the building does not qualify, that the participation threshold is not met, or that the RTM company was not properly formed.
If the counter-notice admits the right: RTM is acquired on the acquisition date stated in the claim notice. If the counter-notice disputes the right: the RTM company must apply to the First-tier Tribunal within two months of the counter-notice. The Tribunal will determine whether the eligibility conditions are met.
If the landlord simply does not serve a counter-notice: RTM is acquired on the acquisition date regardless. The landlord's failure to respond does not prevent the transfer.
The period between claim notice and acquisition date — typically three months — is when the RTM company must prepare to take over management. Key tasks include:
- Appointing a managing agent or confirming self-management arrangements
- Notifying all contractors of the forthcoming management change
- Obtaining buildings insurance quotes ready to place on acquisition day
- Opening a service charge trust account in the RTM company's name
- Requesting transfer of all building documentation from the outgoing agent
- Reviewing service charge accounts for any arrears or pending major works
- Confirming the fire risk assessment is current and any actions are being addressed
On the acquisition date, management of the building transfers to the RTM company. The RTM company is now the entity responsible for all management functions. The outgoing landlord or managing agent must hand over all building documentation, service charge funds (held on trust), insurance policies, and contractor records. Insurance must be in place from midnight on acquisition day — there should be no gap in cover.
Avon Freeholds: The Supreme Court Decision That Changed RTM
Avon Freeholds Ltd v Sovereign Housing Association Ltd [2023] UKSC 3
Prior to this decision, there was a long-running debate about whether leaseholders in a building that forms part of a larger estate or connected development could exercise RTM. Freeholders routinely argued that RTM was unavailable where a building was not fully self-contained — for example, where it shared a roof, foundations, or services with adjacent buildings, or where it was part of a development with communal grounds managed under a head service charge.
The Supreme Court resolved this decisively. It held that RTM can be exercised for a self-contained part of a building — a block within a larger development — provided that part can be managed independently and meets the other eligibility criteria. The fact that the wider development includes other buildings, shared grounds, or estate-level services does not prevent individual blocks from exercising RTM for their own building.
What this means in practice: leaseholders in purpose-built flat developments that include multiple blocks — which were previously told RTM was unavailable because of the estate structure — may now be able to exercise RTM block by block. The key question is whether the specific building (not the whole estate) is self-contained and can be managed independently. If it can, Avon Freeholds removes the previous barrier.
If you were previously advised that RTM was not available for your block because of an estate structure, that advice should be revisited in light of this decision.
What Happens on and After Acquisition
Acquisition day is the point at which the RTM company becomes responsible for managing the building. In the weeks and months that follow, there are specific obligations to discharge and common challenges to navigate.
What the outgoing manager must hand over
The landlord or outgoing managing agent must transfer to the RTM company: all service charge funds (held on trust — these are the leaseholders' money, not the outgoing agent's), all insurance policies and renewal documentation, all building documentation including plans, certificates, warranties, and inspection records, the full maintenance history and outstanding works schedule, all contractor agreements and contact details, leaseholder contact information, and any ongoing Section 20 consultations.
Service charge money is held on trust under Section 42 of the Landlord and Tenant Act 1987. It belongs to the leaseholders collectively, not to the landlord or outgoing agent. An outgoing agent who withholds service charge funds, or who applies them to expenditure after the acquisition date without the RTM company's authority, is in breach of trust. If funds are withheld, seek legal advice immediately — this is not a negotiating position, it is a legal obligation.
The freeholder's ongoing role
After acquisition, the freeholder retains their freehold interest and their rights under the leases. They have the right to be consulted on Section 20 major works as if they were a leaseholder of any non-residential units they hold. They can still enforce the terms of the leases against individual leaseholders (for example, for breach of covenant). What they cannot do is interfere with the RTM company's management functions or instruct contractors acting on behalf of the building.
The RTM company's ongoing obligations
Running an RTM company is substantively the same as running an RMC — the same management obligations, the same legal framework, the same Companies Act requirements. See our service charges guide for the detail on Section 20, service charge accounting, and reserve funds. The RTM company must also file annual confirmation statements at Companies House, maintain its register of members, and hold directors' meetings.
Costs of Exercising RTM
RTM company costs (borne by leaseholders)
- Companies House incorporation fee — currently £50 online
- Solicitor fees for the claim process — typically £2,000–£5,000 depending on complexity and whether a Tribunal application is needed
- Any Tribunal application fees if the freeholder disputes the claim
- Surveyor or managing agent fees for pre-acquisition building audit
- Ongoing Companies Act compliance — accountant and confirmation statement fees
What leaseholders cannot be charged
- The freeholder's legal costs of responding to a valid RTM claim — the Act does not require leaseholders to pay the landlord's costs of a valid claim
- Any payment to the freeholder for loss of management rights — RTM is a no-compensation right
- The freeholder's costs of disputing the claim at the First-tier Tribunal — each party typically bears their own costs at Tribunal
Depending on the lease, the RTM company's legal costs of exercising the right to manage may be recoverable from the service charge — particularly costs incurred after acquisition that relate to building management rather than the RTM claim itself. Take advice on this before committing to legal expenditure, and ensure costs are clearly categorised in the service charge accounts.
RTM vs. the Alternatives
RTM is not the only option for leaseholders who want more control over their building. Understanding how it compares to the alternatives helps identify the right route for your situation.
| Factor | Right to Manage | Collective Enfranchisement | Section 24 Manager |
|---|---|---|---|
| What you get | Management control — not ownership | Freehold ownership — full control | Court-appointed manager — limited period |
| Freeholder consent needed? | No | No — but they receive a price | No — but must prove grounds |
| Cost to leaseholders | Legal fees only — no payment to freeholder | Freehold purchase price plus legal and valuation costs — can be substantial | Application costs, ongoing manager's fees |
| Fault required? | No — entirely no-fault | No | Yes — must demonstrate management failure |
| Participation threshold | 50% of flats must be RTM members | At least 50% of qualifying tenants must participate | Any leaseholder can apply — no threshold |
| Reversibility | RTM company can be wound up — management returns to freeholder | Permanent — freehold is owned collectively | Manager's appointment can be ended by Tribunal |
| Best suited for | Leaseholders who want management control without the cost of buying the freehold | Leaseholders who want full ownership, can raise capital, and want to extend leases cheaply thereafter | Extreme management failures where other routes have been exhausted |
Six Mistakes That Derail RTM Claims
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Serving the claim notice before the NIP period has expired
The Notice of Invitation to Participate must be served and its minimum 14-day period must expire before the claim notice can be served. Serving the claim notice prematurely — even by a day — invalidates it. The RTM company must then wait twelve months before making a new claim for the same building. Always keep a documented timeline with dates.
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Falling below 50% participation before the claim notice is served
Leaseholders who join the RTM company and then resign before the claim notice is served reduce the membership count. If participation falls below 50% of all flats at the date of service, the claim is invalid. Monitor membership carefully during the run-up to the claim notice and move quickly once you have the necessary numbers secured.
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Using the wrong articles of association for the RTM company
The RTM company must be incorporated with the prescribed model articles under the 2009 Regulations. Standard Companies House articles of association for a company limited by guarantee are not the same and do not satisfy the statutory requirement. An RTM company incorporated with the wrong articles is not a valid RTM company for the purposes of the Act, and the claim will fail if the freeholder challenges it.
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Failing to serve notices on all relevant parties
The claim notice must be served not just on the immediate landlord but on any intermediate landlord, any manager appointed under Part II of the Landlord and Tenant Act 1987, and any person who has obligations under the leases relating to the repair or maintenance of the building. Missing a required recipient can invalidate the notice. Get a full title report on the building and identify all interested parties before serving.
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Not checking whether the building is genuinely self-contained
Self-containment is a legal concept, not just a physical observation. A building that shares a roof void, structural elements, or essential services with an adjacent building may not be self-contained in the statutory sense — though Avon Freeholds has narrowed the circumstances in which this will prevent RTM. Take legal advice on self-containment before incorporating the company, not after the claim is challenged.
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Being unprepared for the acquisition date
Some RTM companies succeed in acquiring management only to find themselves unable to run the building effectively from day one — no managing agent appointed, no insurance placed, no contractor arrangements made. The three-month period between claim notice and acquisition date exists precisely to allow preparation. Use it. Arrive at acquisition day with insurance in place, a managing agent appointed or self-management arrangements confirmed, and a clear plan for the first 90 days.
The Neon RTM Freedom Plan™
We have taken over management from freeholders on behalf of RTM companies across London and Essex. We know what the claim process requires, what acquisition day looks like operationally, and what the first year of RTM management needs to achieve to justify the effort the leaseholders put into getting there.
- Free RTM feasibility assessment. We assess your building against the eligibility criteria, review the title, and give you an honest view of whether RTM is the right route — and whether Avon Freeholds opens the door if you were previously told it wasn't available.
- Solicitor coordination. We work alongside your RTM solicitor throughout the claim process — handling the operational planning, building audit, and contractor notification so the legal process and management transition happen in parallel, not sequentially.
- Acquisition day readiness. Insurance placed. Service charge account open. Contractors briefed. Fire risk assessment reviewed. Building documentation requested. We manage every element of the handover so there is no gap in management cover on day one.
- First year support. The first year after RTM acquisition is when most RTM companies encounter unexpected issues — outgoing agents withholding funds, outstanding Section 20 consultations, reserve fund shortfalls. We provide intensive support in year one and a clear plan for the years beyond.
- Transparent management fees. Fixed annual fee. No percentage uplift. No insurance commissions. Full service charge accounts within four months of year end.
Frequently Asked Questions
The Right Is There. The Question Is Whether to Use It.
RTM is a genuine and powerful remedy for leaseholders who want control over how their building is managed. It is not without complexity — the process is statutory, the deadlines are strict, and the company it creates carries real ongoing obligations. But for buildings where the current management is failing, where service charges are unexplained, or where the freeholder's interests and the leaseholders' interests have simply diverged, it is the most direct route to meaningful change available without buying the freehold.
If you are considering RTM and want an honest assessment of whether your building qualifies, whether the Avon Freeholds decision changes your position, and what the process would realistically involve, that is exactly what our feasibility assessment is for.