An RTM company—short for a Right to Manage company—is a special type of company set up by leaseholders in the UK to take over the management of their own residential building. Think of it as you and your neighbours teaming up to form your own board of directors for your block, giving you direct control over everything from gardening and insurance to major repairs and service charges.
Instead of a distant landlord making all the calls, you get to run the show. This is a powerful tool for leaseholders who, according to a recent survey, often feel unheard, with 56% reporting disputes with their freeholder over high service charges or poor maintenance.
Unlocking Your Power as a Leaseholder
For many leaseholders, feeling trapped by rising service charges or shoddy maintenance is a familiar and deeply frustrating experience. The Right to Manage (RTM) is the legal tool designed to fix this, putting control firmly back into the hands of the residents who actually live there.
This isn't some favour you have to ask for; it's a statutory right baked into UK law. That means you don't need the freeholder’s permission to do it, nor do you have to prove they’ve been mismanaging the building. You just need to follow the process.
The Legal Foundation for Your Control
The power to do this comes from a key piece of legislation: the Commonhold and Leasehold Reform Act 2002. This Act was a game-changer, designed specifically to give leaseholders a clear, legal path to take over the management of their building. The RTM company is simply the formal vehicle you create to claim and exercise that right.
In essence, an RTM company is a private company limited by guarantee, formed by a group of qualifying leaseholders to wrestle control away from the freeholder. This right empowers flat owners in blocks across regions like East London and Essex to start making the crucial decisions themselves. You can dive deeper into the legal specifics by exploring the details of Right to Manage in the UK.
So, why go to the trouble? This shift in control delivers a few key benefits that drive leaseholders to form an RTM company:
- Total Transparency: You finally get to see exactly how your service charge money is being spent. Every invoice, every contract, is open to scrutiny.
- Direct Cost Control: The RTM company can shop around for better deals on everything from insurance to cleaning, often leading to real savings for everyone.
- Better Quality of Service: You're no longer stuck with the freeholder's preferred (and often unresponsive) contractors. You get to hire people who do a good job.
The big idea behind an RTM company is simple: it transforms passive residents into active decision-makers. It’s about taking real ownership of your living environment and making sure it’s run efficiently, in the best interests of the people who call it home.
Of course, navigating the legal maze—from setting up the company correctly to serving the right notices on the freeholder—requires precision. Our online Resource Hub is packed with guides to help you understand the process, while our expert team can manage the entire journey for you, making sure every step is compliant, correct, and completely stress-free.
So, Do You Qualify to Take Control?
Before you can even think about forming a Right to Manage (RTM) company, you’ve got to tick a few legal boxes first. Getting this right from the outset is non-negotiable. A simple mistake here can stop your RTM journey in its tracks, wasting both time and money.
The law provides a clear checklist. First off, the building itself must be a self-contained building or at least a self-contained part of one, and it needs to have at least two flats. This just ensures that the management responsibilities can be cleanly separated from any neighbouring properties.
Next, it’s all about who holds the leases. At least two-thirds of the flats in the building must belong to ‘qualifying tenants’. In simple terms, this usually means people who were originally granted a lease for more than 21 years. This rule makes sure that the push for RTM comes from those with a real long-term stake in the building.
Game-Changing Reforms Have Opened the Doors Wider
Recent UK property law reforms have massively expanded the number of leaseholders who can exercise their Right to Manage. The biggest change is a real game-changer for anyone living in a mixed-use building – those properties with both flats and commercial spaces like shops or offices.
For years, if more than 25% of a building's internal floor area was used for non-residential purposes, it was automatically disqualified. This was a huge roadblock for thousands of properties, especially in city centres.
The Leasehold and Freehold Reform Act 2024 has completely changed the landscape. The non-residential limit has been raised to a much more practical 50%. This one change has unlocked the Right to Manage for countless previously ineligible buildings across the UK.
Picture a typical building in North London with flats above a parade of ground-floor shops. Under the old rules, if those shops took up 30% of the space, the leaseholders were stuck. Today, that same building qualifies easily, finally giving residents the power to take control.
The recent reforms have made a tangible difference, simplifying the path to RTM for many. Here’s a quick look at how the rules have shifted in your favour.
Key RTM Eligibility Criteria at a Glance
| Eligibility Criterion | Previous Rule | Current Rule (Post-Reform) | What This Means for You |
|---|---|---|---|
| Non-Residential Limit | Max 25% of internal floor area could be commercial. | Max 50% of internal floor area can be commercial. | Thousands of mixed-use buildings with shops or offices are now eligible. |
| Shared Ownership Leases | Often excluded or in a legal grey area. | Shared ownership leases now explicitly qualify for RTM. | If you're a shared owner, you can now fully participate in an RTM claim. |
| Multiple Buildings | Each building required a separate RTM company. | A single RTM company can now manage multiple buildings on an estate. | It's now far easier and more cost-effective to manage entire estates. |
These changes are all about making the Right to Manage more accessible and straightforward, removing outdated barriers that held leaseholders back.
Getting Enough Neighbours on Board
Even if your building ticks every box, there's one final hurdle: you need critical mass. You can’t go it alone. To move forward with an RTM claim, you need enough of your fellow qualifying tenants to join in.
The rule is that leaseholders from at least 50% of the total number of flats in the building must agree to become members of the RTM company. So, in a block with 20 flats, you’d need the leaseholders from at least 10 of them to formally sign up. This makes perfect sense – it ensures the desire to self-manage is a collective one, not just the project of a handful of residents.
Navigating these detailed requirements can feel like a minefield, and one small miscalculation can lead to a failed claim and sunk costs. This is exactly why getting an expert eligibility check is so vital. We can conduct a forensic audit to confirm your building qualifies, giving you the solid foundation you need to move forward with confidence. Our Resource Hub also has plenty of guides to help you get to grips with every step.
The Step-by-Step Process to Claiming Management
Once you’ve confirmed your building is eligible, the journey to taking control of its management follows a clear, legally defined roadmap. This process is structured to ensure fairness, but it demands meticulous attention to detail. Just one missed deadline or an incorrectly worded notice can put the whole thing in jeopardy.
The very first move is to create your vehicle for change: the Right to Manage (RTM) company. This isn’t just a casual group of neighbours; it must be a formal company limited by guarantee, officially set up and registered at Companies House. Its articles of association have to follow specific legal rules to make sure it’s fit for purpose.
Starting the Formal Process
With your RTM company officially registered, it’s time to start the formal communications. You must serve a Notice of Participation to every single qualifying leaseholder in the building who hasn't already joined as a member. This is a formal invitation, giving them a clear chance to get on board before the claim moves forward.
This isn’t an optional courtesy; it’s a critical legal step. It makes sure every eligible leaseholder knows what’s happening and has the opportunity to be part of the change before the claim is made to the freeholder.
Serving the Claim Notice
After waiting at least 14 days from sending out the participation notices, you can take the main step: serving the Claim Notice on the freeholder. This is the formal legal document that officially states your RTM company’s intention to take over the management of the building.
The Claim Notice is both time-sensitive and information-critical. It must specify a date for the freeholder to respond with a counter-notice, and a proposed "acquisition date" for when your RTM company plans to take over. This acquisition date has to be at least three months after the counter-notice deadline.
This flowchart gives a simple overview of the initial checks that lead you to this point.
As the visual shows, qualifying the building, the flats, and the people are all essential steps you have to complete before you can formally kick off the process.
Navigating the Landlord's Response
The freeholder has a right to challenge your claim, but only on very specific legal grounds. If they want to dispute it, they have to serve a Counter-Notice by the deadline you stated in your Claim Notice. This document must clearly explain their reasons for objecting, which are usually limited to arguments about eligibility.
If you receive a Counter-Notice, your RTM company may need to apply to the First-tier Tribunal (Property Chamber) to get a ruling on whether your claim is valid. However, if the freeholder fails to serve a Counter-Notice in time, your right to manage is automatically granted, and you’ll take over on your proposed acquisition date.
Real-Life Example: An Essex Block's Costly Setback
A group of leaseholders in an Essex block followed the process diligently, only to have their claim thrown out. The reason? A simple administrative error—they had miscalculated the deadline on their Claim Notice by a single day. This forced them to start the entire process all over again, costing them valuable time and extra legal fees.
This scenario really hammers home how crucial professional oversight is. Minor mistakes can have major consequences, causing frustrating delays and unnecessary expense. Our expert team can manage every piece of legal paperwork, communication, and deadline on your behalf. We make sure every notice is compliant and every step is executed perfectly, taking the pressure off you and securing a smooth, successful takeover. If you're considering this path, you might be interested in our complete guide to taking control of your building. We handle the complexity so you can focus on the benefits of being in control.
Your New Responsibilities as an RTM Director
Successfully claiming your Right to Manage is a huge achievement, but it’s also where the real work begins. Once the acquisition date passes, your RTM company effectively steps into the shoes of the old freeholder or managing agent. This means taking on all the legal and practical duties involved in running the building smoothly and compliantly. It’s a major shift from claiming control to exercising it responsibly.
This new role comes with significant responsibilities that fall into two main camps: managing the money and looking after the building itself. You are now accountable to every single leaseholder for the decisions you make and every penny you spend.
Mastering Financial Management
One of the core functions of an RTM company is handling the block's finances with total transparency and care. This is often the main reason leaseholders want to take control in the first place—to stop seeing their money wasted.
Your key financial duties will include:
- Setting Annual Budgets: You'll need to forecast the building's expenditure for the year ahead, covering everything from the cleaning contract to a contingency for unexpected repairs.
- Collecting Service Charges: This involves issuing demands to all leaseholders (including yourselves) and making sure the funds are collected on time to pay for everything.
- Managing Reserve Funds: Smart management means building a ‘sinking’ or reserve fund. This pot of money covers major future works, like a roof replacement or lift modernisation, and stops residents from being hit with sudden, massive bills.
This financial control brings immediate, tangible benefits. For instance, a recently formed RTM company in East London took over and immediately put their buildings insurance out to tender. By getting multiple quotes instead of just renewing with the freeholder's expensive provider, they saved all residents 20% on their annual premium overnight.
Overseeing Practical Building Management
Beyond the numbers, you are now responsible for the physical fabric of the building and the safety of everyone living in it. This requires a proactive approach to maintenance and compliance, making sure the property is a safe, well-kept, and pleasant place to live.
This side of the job covers a wide range of tasks:
- Arranging Buildings Insurance: Securing comprehensive cover for the property is a fundamental legal requirement you cannot skip.
- Scheduling Maintenance: This includes organising routine tasks like cleaning communal areas, gardening, and servicing lifts or fire safety equipment.
- Ensuring Health and Safety Compliance: You must adhere to all relevant UK regulations, such as arranging fire risk assessments and asbestos surveys. A detailed look at what this involves can be found in our guide to property manager responsibilities.
- Handling Repairs: When something breaks—a leaking pipe, a faulty entry phone—it’s now the RTM company’s job to get it fixed quickly and effectively.
The rules around these duties are also getting tighter. RTM companies must operate under specific model articles, with important updates coming via the RTM Companies (Model Articles) (England) (Amendment) Regulations 2025. A key change, enforced from 3 March 2025, caps a landlord’s voting power—a huge step in strengthening leaseholder control, especially in mixed-use buildings.
Taking on these duties doesn't mean you have to become a full-time property manager overnight. The goal is to have control over the decisions, not to be overwhelmed by the day-to-day administration.
This is where getting professional support makes all the difference. Our Virtual Property Management service is designed specifically for RTM directors like you. We handle the administrative heavy lifting—from chasing service charges to vetting contractors—while you and your fellow directors keep ultimate decision-making power. It's the perfect balance of control and support.
How Recent Reforms Make RTM More Accessible
For years, one of the biggest things stopping leaseholders from exercising their Right to Manage was the fear of being landed with the freeholder's legal bills. The thought of an open-ended invoice for thousands of pounds was often enough to stop a claim in its tracks, a financial weapon that heavily favoured landlords.
But that’s all changed. Landmark reforms have now completely flipped this dynamic, making the whole RTM process far more affordable for leaseholders across the UK. The most important update is simple but powerful: for a standard RTM claim, you no longer have to automatically pay the freeholder's legal costs.
This single change dramatically lowers the financial gamble of pursuing your right to manage, empowering residents who were previously priced out of the process.
The End of Landlord Legal Fees
This game-changing shift comes from the Leasehold and Freehold Reform Act 2024. A key part of the act, which kicks in from 3 March 2025, gets rid of the rule that forced RTM companies to cover the freeholder's legal fees in standard claims.
Previously, landlords could rack up huge legal bills challenging an application, knowing the leaseholders would have to foot the bill. Now, that power has been taken away. Under the new law, RTM applicants are no longer on the hook for these costs unless there are exceptional circumstances, like unreasonable behaviour on their part.
Let's see what that looks like in the real world with a block of flats in Essex.
- The Old Way: The leaseholders' RTM company serves a claim notice. The freeholder hires expensive solicitors to pick it apart. Even though the claim is perfectly valid, the leaseholders get a bill for £5,000 to cover the landlord's legal work, causing huge arguments among the residents.
- The New Way: The same leaseholders serve the same notice. The freeholder can still get legal advice, but they have to pay for it themselves. The leaseholders’ only major costs are their own, which they can plan for. That £5,000 bill from the landlord? It just vanishes.
This change alone makes the entire process fairer and far more achievable.
Closing Another Cost Loophole
The reforms didn't stop there. They also closed a sneaky backdoor that some landlords used to pass on their expenses. It's now been made clear that freeholders can’t try to recover their non-litigation RTM costs from residents through the general service charge fund. This ensures a much cleaner financial break once your RTM company takes over.
You can dive deeper into what the 2024 RTM reforms mean for London leaseholders in our detailed guide.
This new, more favourable financial landscape means the path to taking control of your building is clearer and more affordable than ever before. The fear of an open-ended legal bill from the freeholder is now a thing of the past for standard claims.
With these financial roadblocks gone, the focus shifts back to getting the process right. Our team is perfectly placed to help you make the most of these changes. Our services offer a cost-effective, expertly managed process, ensuring your claim is handled correctly from start to finish. You can now secure management of your building without the financial dread of the old system.
Partnering with Neon for a Successful RTM Journey
Taking the leap to Right to Manage can feel like a mountain to climb, but you don't have to go it alone. At Neon Property Services, we've designed a complete, guided service to get you from feeling frustrated with your current management to being fully empowered. Our entire approach is built to ensure the transition is smooth and professional, giving you the control you've been fighting for without the endless administrative headaches.
It all kicks off with a free, no-obligation discovery call to get to grips with your building's unique situation. From there, we run a comprehensive eligibility audit. This crucial first step confirms that your building and fellow leaseholders meet all the legal criteria, stopping any costly mistakes before you've even started.
From Formation to Handover
Once we’ve confirmed you’re eligible, we get to work on every critical step. We’ll form your official RTM company at Companies House, making sure its articles of association are fully compliant with UK law. Our team then prepares and serves all the necessary legal notices for you, from the initial Notice of Participation to rally your neighbours, to the formal Claim Notice that gets served on the freeholder.
Our main goal is to secure a professional, conflict-free handover. We manage all communications, handle any queries from the freeholder, and make sure every single deadline is hit. This expert oversight takes the stress and uncertainty right out of the process, leaving you free to focus on the future of your building.
Life After Takeover Support
Gaining control is just the beginning; running the building effectively is the key to long-term success. We know many new RTM directors worry about the day-to-day responsibilities, which is exactly why we're here to bridge that gap with ongoing support.
Our Virtual Property Management service is designed specifically for RTM companies like yours. It empowers you and your fellow directors by providing the expert back-office support you need for block management, from handling financial reporting and service charge collection to compliance checks and vetting contractors. You keep full control over the decisions, while we take care of the heavy administrative lifting.
Partnering with an expert doesn't mean giving up control—it means amplifying it. We provide the structure and support so you can make informed decisions confidently and effectively for the benefit of all residents.
To give you even more support, our online Resource Hub is packed with free guides, checklists, and practical tools to help you succeed as a director. This library of information is there for you 24/7, offering valuable insights whenever you need them.
The path to managing your own building is clearer and more achievable than ever. By partnering with Neon Property Services, you gain an expert ally who is completely dedicated to your success. It’s time to take the first step.
Book your free discovery call with us and start your journey towards RTM freedom.
Your Top Questions Answered
Even when the path forward seems clear, it's completely natural to have a few lingering questions before you dive into the Right to Manage process. Let's tackle some of the most common queries we hear from leaseholders, giving you the straightforward answers you need to move forward with confidence.
Can the Freeholder Simply Refuse Our RTM Claim?
A freeholder can't just say "no" out of preference. They can only challenge your claim on very specific and narrow legal grounds, like if the building or the participating leaseholders don't meet the strict qualification criteria.
If your claim has been put together correctly and every legal box is ticked, any challenge they mount is highly unlikely to succeed at the Property Tribunal. This is precisely why getting professional help is so critical; it shuts down the potential for a successful dispute before it even begins.
What Happens to the Current Managing Agent?
Once your RTM company officially takes over on the acquisition date, the freeholder's contract with their managing agent is automatically terminated. Simple as that. The old agent no longer has any authority to manage the building.
Your new RTM company is then completely free to either manage the property itself or appoint a new agent that you choose. This is the perfect time to bring in a flexible, expert service like our Virtual Property Management, which gives you professional-grade tools without the hefty price tag.
An RTM company’s job is management, not ownership. Key responsibilities, like collecting ground rent, stay firmly with the freeholder. This keeps the duties clear and separate.
Do We Need Every Single Leaseholder to Join In?
Not at all. You don't need 100% participation to get things moving. The legal requirement is that at least 50% of the qualifying leaseholders must become members of the RTM company for the claim to be valid.
Once you've successfully acquired the Right to Manage, the RTM company acts on behalf of all leaseholders in the building. This includes those who decided not to join in at the start, ensuring everyone benefits from consistent, unified management.
Will We Be Responsible for Collecting the Freeholder's Ground Rent?
Absolutely not. An RTM company's responsibilities are strictly limited to the day-to-day management functions set out in the leases. This means looking after maintenance, arranging buildings insurance, and collecting service charges.
Individual leaseholders remain responsible for paying their ground rent directly to the freeholder, exactly as their lease dictates. The RTM company has no involvement in the collection or payment of ground rent whatsoever.
Ready to take the next step with total confidence? The expert team at Neon Property Services Ltd can guide you through every stage, from the initial eligibility checks to a successful handover. Our expert services and Virtual Property Management platform are designed to give you the support you need to take control and succeed.