Right to Manage: A Complete Guide to Leaseholder Empowerment in 2024

The Right to Manage (RTM) represents one of the most significant shifts in UK property law over the past two decades, fundamentally altering the balance of power between leaseholders and freeholders. Introduced by the Commonhold and Leasehold Reform Act 2002, RTM has empowered thousands of leaseholders to take control of their building's management, often resulting in improved services and reduced costs.

For managing agents and property professionals, understanding RTM is crucial. Whether you're currently managing a building that may face an RTM claim or considering working with an RTM company, the landscape has evolved significantly since the legislation's introduction.

What is Right to Manage?

Right to Manage is a legal right that allows qualifying leaseholders to take over the management of their building from the freeholder without having to prove fault or pay compensation. Unlike other leasehold enfranchisement rights, RTM doesn't require leaseholders to demonstrate poor management or excessive costs—they simply need to meet the statutory criteria and follow the correct procedures.

The right applies to most residential buildings containing two or more flats, provided at least two-thirds of the flats are held on long leases. Crucially, no more than 25% of the internal floor area can be occupied for non-residential purposes, ensuring the legislation focuses on predominantly residential developments.

Key benefits for leaseholders include:

• Direct control over service providers and contracts
• Transparency in budgeting and expenditure
• Ability to challenge unnecessary costs
• Greater responsiveness to residents' concerns
• Potential for cost savings through competitive tendering

Eligibility Requirements and Legal Framework

The RTM process is governed by strict statutory requirements under the Commonhold and Leasehold Reform Act 2002, with detailed procedures set out in The Right to Manage (Prescribed Particulars and Forms) (England) Regulations 2010.

Building eligibility criteria:

• Contains at least two flats held on qualifying long leases
• At least two-thirds of flats must be held on qualifying leases
• No more than 25% internal floor area used for non-residential purposes
• Building must be self-contained (though conversions may qualify)

A qualifying long lease typically means an original term exceeding 21 years. Mixed-use developments can qualify, but the non-residential element must not exceed the 25% threshold—a calculation that has been the subject of numerous tribunal decisions.

The RTM company must be established as a private company limited by guarantee, with membership open to all qualifying leaseholders. While there's no minimum participation requirement, having broad leaseholder support significantly improves the chances of successful implementation.

The RTM Process: Step-by-Step Guide

The RTM process involves several critical stages, each with strict deadlines and formal requirements. Failure to comply with these procedures can result in the claim being struck out, so precision is essential.

Formation and Initial Steps

The process begins with establishing the RTM company, which must have articles of association complying with the prescribed model. The company name must end with "RTM Company Limited" and include the building's address or name. At least half of the qualifying leaseholders must become members before serving the claim notice.

Once established, the RTM company must serve a claim notice on the freeholder, any intermediate landlords, and all qualifying leaseholders. This notice must specify the building, demonstrate compliance with eligibility requirements, and provide a clear description of the premises to be managed.

Notice Periods and Responses

The freeholder has one month from service of the claim notice to serve a counter-notice. This can either admit the right to manage or deny it, specifying grounds for denial. If no counter-notice is served, the right is deemed admitted.

Where a counter-notice disputes the claim, either party can apply to the First-tier Tribunal (Property Chamber) for determination. The tribunal will examine whether the statutory requirements have been met and whether any procedural defects are fatal to the claim.

Modern platforms like WiseBlock are increasingly being used by RTM companies to streamline these complex procedures, ensuring compliance with notice requirements while maintaining clear audit trails of all communications.

Practical Challenges and Common Pitfalls

While RTM offers significant benefits, the reality of taking over building management presents numerous challenges that leaseholders must be prepared to address.

Financial Responsibilities: RTM companies inherit all existing contracts and obligations, including potentially onerous long-term agreements. They become responsible for insurance, health and safety compliance, and maintaining adequate reserves for major works. Many RTM companies underestimate these ongoing financial commitments.

Professional Expertise: Managing a residential building requires specialist knowledge of building regulations, health and safety law, and leasehold legislation. Many RTM companies initially attempt self-management but eventually engage professional managing agents when the complexity becomes apparent.

Dispute Resolution: RTM companies must handle disputes between leaseholders, enforce lease covenants, and manage potentially contentious decisions about expenditure and improvements. This requires diplomatic skills and legal understanding that volunteer directors may lack.

Common Legal Pitfalls

• Inadequate consultation: Major works still require Section 20 consultation, with RTM companies liable for procedural failures
• Service charge recovery: Collecting unpaid service charges requires understanding of forfeiture procedures and debt recovery
• Insurance obligations: Failure to maintain adequate insurance can expose directors to personal liability
• Health and safety compliance: RTM companies inherit all statutory duties, including fire safety and building regulations compliance

The Future of RTM: Reform and Development

The government's ongoing leasehold reform agenda promises significant changes to RTM procedures. The Law Commission's recommendations, published in 2020, propose simplifying the RTM process and reducing procedural barriers that currently prevent many leaseholders from exercising their rights.

Proposed reforms include:

• Reducing qualifying thresholds and membership requirements
• Streamlining notice procedures and reducing waiting periods
• Extending RTM rights to mixed-use developments with higher non-residential percentages
• Providing greater protection against retaliatory actions by freeholders

These changes, when implemented, will likely increase RTM uptake significantly. Property professionals should prepare for a landscape where leaseholder empowerment becomes the norm rather than the exception.

Technology platforms are already adapting to support this trend, with systems like WiseBlock offering RTM companies the same professional-grade management tools traditionally available only to commercial managing agents.

Best Practices for Managing Agents

For managing agents, RTM represents both challenge and opportunity. While some may lose management contracts to RTM companies, others find new revenue streams in providing professional services to these organisations.

Working with RTM companies requires:

• Transparent pricing and clear service definitions
• Regular reporting and stakeholder communication
• Collaborative approaches to decision-making
• Educational support to help directors understand their responsibilities

The most successful managing agents adapt their service models to work partnership-style with RTM companies, recognising that these organisations often have higher expectations for service delivery and transparency than traditional landlords.

As RTM continues to mature, it's clear that this legislation has fundamentally shifted the leasehold landscape. For leaseholders, it offers genuine empowerment and control. For property professionals, it represents an evolving market that rewards expertise, transparency, and collaborative working relationships. Success in this environment requires understanding not just the legal framework, but the practical realities of resident-led management and the technologies that support it.