Exercising the Right to Manage (RTM): What Leaseholders Need to Know

What Is the Right to Manage (RTM)?

The Right to Manage (RTM) allows qualifying leaseholders of a block of flats to take over building management from the landlord without proving fault.

Leaseholders form an RTM company and follow a statutory process under the Commonhold and Leasehold Reform Act 2002. Once the claim succeeds, the RTM company takes responsibility for managing services, maintenance, insurance and service charges for the building.

Exercising the Right to Manage (RTM): What Leaseholders Need to Know

The Right to Manage (RTM) is one of the most important statutory tools available to residential leaseholders in England and Wales. It allows qualifying leaseholders to take over the management of their building from the landlord, without having to prove fault, mismanagement, or poor service. When used correctly, RTM can significantly improve how a building is run, increase transparency over costs, and give leaseholders greater control over their homes.

RTM is, however, a technical legal process. Mistakes in eligibility, procedure or timing can delay the claim, invalidate it altogether or lead to disputes with the landlord. The RTM rules have also been updated in recent years, including changes introduced under the Leasehold and Freehold Reform Act 2024. Leaseholders should therefore always check the current legal position before acting.

In practice many RTM claims that encounter difficulty do so not because RTM is unavailable but because the process has not been handled with sufficient care.

This article explains how RTM works, who can use it, the steps involved, the risks to watch for and when taking legal advice may help improve the prospects of a smooth transition.

What the Right to Manage actually gives leaseholders

Understanding the scope of RTM powers

The Right to Manage is a statutory right introduced by the Commonhold and Leasehold Reform Act 2002. It enables leaseholders, acting through a specially formed RTM company, to take over most of the landlord’s management functions for their building.

RTM does not involve buying the freehold or changing ownership. The landlord remains the freeholder and continues to receive ground rent but responsibility for day-to-day management passes to the RTM company.

In practical terms, this usually includes responsibility for appointing and dismissing managing agents, arranging repairs and maintenance, setting and collecting service charges, managing insurance subject to statutory rules and complying with health and safety obligations affecting the building.

RTM gives leaseholders greater control, but not ownership. Alongside decision-making power comes legal responsibility and those obligations need to be understood from the outset.

Which buildings qualify for the Right to Manage

Eligibility criteria that often cause problems

Not every building qualifies for RTM and eligibility remains one of the most common areas of dispute.

The right to manage only applies to a self-contained building, or part of a building, that is made up of flats. Individual leasehold houses do not qualify.

A building will generally qualify if:

• It is self-contained or capable of being self-contained
• It contains at least two flats
• It has no more than 50 percent of the building used for non-residential purposes (excluding common parts) and;
• It has at least two-thirds of the flats held on long leases.

The increase in the non-residential threshold from 25 percent to 50 percent means that more mixed-use buildings can now qualify for RTM. At the same time, it has made careful measurement and analysis more important.

RTM does not apply if the premises fall within certain excluded categories. For example, the right is not available where the immediate landlord of any qualifying tenant is a local housing authority or where the building falls within specific statutory exemptions.

Each eligibility requirement has a precise legal meaning. “Self-contained” is not simply a physical description and the mixed-use calculations depend on floor area rather than labels. Where eligibility is uncertain, taking advice early can avoid wasted time and cost.

Who can participate in an RTM claim?

Leaseholder participation requirements

RTM must be exercised collectively. A dedicated RTM company must be incorporated and qualifying leaseholders must become members of that company.

A qualifying leaseholder is a “qualifying tenant”, meaning a leaseholder whose lease was originally granted for a term of more than 21 years. There is no requirement that the leaseholder has lived in the flat and there is no statutory limit on how many flats one person can own, although ownership structures can affect how participation works in practice.

Before the RTM company can take over management, qualifying leaseholders who are members of the RTM company must represent at least half of the total number of flats in the building.

Unanimity is not required. Provided the statutory threshold is met, a minority of leaseholders cannot prevent the claim from proceeding.

Why leaseholders choose to exercise RTM

Common motivations behind RTM claims

Leaseholders pursue RTM for a range of practical reasons, and cost is often only part of the picture.

• Dissatisfaction with managing agents: Many RTM claims arise where leaseholders feel poorly serviced or ignored by managing agents appointed by the landlord. RTM allows leaseholders to appoint agents who are directly accountable to them, or to self-manage where appropriate.

• Lack of transparency over service charges: RTM gives leaseholders greater oversight of budgeting and expenditure. While statutory consultation requirements still apply, decisions about works and spending sit with the RTM company rather than the landlord.

• Long-term planning for the building: Leaseholders often view RTM as a way to take a more proactive approach to maintenance and long-term planning, particularly where they expect to own their flats for many years.

RTM is just one option alongside lease extension, collective enfranchisement and wider leasehold reforms, including proposed changes to ground rent. It is best considered as part of an overall strategy for the building rather than in isolation.

The legal process for exercising RTM

Key statutory steps explained

The RTM process is structured and time-sensitive. Although it is designed to be accessible, there is limited tolerance for procedural error.

The main stages include:

• Incorporating the RTM company
• Serving a Notice Inviting Participation on non-member leaseholders
• Serving a Claim Notice on the landlord and other relevant parties
• Allowing time for any response or challenge; and 
• Taking over management functions on the handover date.

Each notice must contain prescribed information and be served correctly. Errors in names, descriptions, or dates are common reasons for challenge.

If the claim is disputed, it may be determined by the First-tier Tribunal (Property Chamber) which can add even further delay.

What happens once RTM is acquired?

Responsibilities that transfer to leaseholders

RTM is not simply a change of managing agent. Once RTM takes effect, the RTM company becomes responsible for complying with the landlord’s management obligations under the leases and under statute.

This includes compliance with health and safety legislation, arranging buildings insurance where required, maintaining proper service charge accounts, consulting on qualifying works and long-term agreements and enforcing lease covenants fairly and consistently.

These responsibilities carry legal and financial risk if mishandled. Clear decision-making structures and appropriate professional support are therefore important.

Risks and common mistakes in RTM claims

Where RTM claims often go wrong

RTM is a statutory right, but it is not automatic. Problems most often arise from avoidable mistakes.

• Procedural defects in notices: Incorrect or incomplete notices can invalidate the claim or force it to restart. Even technical errors can be decisive if challenged.

• Underestimating post-RTM obligations: Some leaseholders focus on acquiring RTM without fully appreciating the ongoing responsibilities that follow, which can lead to service issues or internal disputes.

• Allowing disputes to escalate unnecessarily: Poor communication or entrenched positions can push otherwise manageable disagreements into tribunal proceedings.

These risks do not mean RTM should be avoided but they highlight the importance of careful preparation.

RTM and the landlord’s continuing rights

What RTM does not remove

RTM does not remove the landlord entirely from the picture. Certain rights and obligations remain.

Ground rent continues to be payable, the landlord retains rights to information and in some cases responsibility for structural elements remains with the landlord. A landlord can also apply to the tribunal if the RTM company fails to comply with its obligations.

RTM works best when it is understood as a legal reallocation of management responsibility rather than a complete exclusion of the landlord.

Timescales and costs

RTM is often quicker and less expensive than collective enfranchisement, but it still involves cost.

Many claims complete within a few months if uncontested. Typical costs include company formation, legal advice, notice preparation, professional fees for managing agents or accountants and potential tribunal costs where disputes arise.

Leaseholders should also be aware that landlords may be able to recover some of their reasonable costs of dealing with the RTM claim. The route and extent of recovery depend on the current statutory regime and the wording of the individual leases and are frequently disputed.

Both landlords’ and RTM companies’ legal and professional costs are not automatically recoverable through service charges. In some cases landlords may still recover limited costs, for example for providing information or where ordered by a tribunal, so the precise cost exposure should be assessed in each claim.

Because the RTM regime has been recently amended and further leasehold reforms are in progress, the costs position and procedural detail may continue to evolve.

When leaseholders should seek legal advice

The value of early involvement

Although RTM is designed to be accessible, legal advice can materially improve the prospects of a smooth and successful claim, particularly where the building is mixed-use, ownership structures are complex, there is an existing dispute with the landlord or leaseholders plan to self-manage.

Advice at an early stage can help identify risks, clarify strategy, and reduce the likelihood of avoidable delay or dispute later on.

Related Property and Leasehold Legal Services

Issues surrounding the Right to Manage often overlap with wider legal matters affecting leaseholders and landlords. These may include disputes over service charges, breaches of lease obligations, management responsibilities, and tribunal proceedings. Our team advises clients on a broad range of related matters including Right To Manage, property litigation, contract disputes, commercial litigation, professional negligence, Leasehold Advisory Law and debt recovery, providing practical guidance where building management conflicts escalate into formal legal disputes.

How the Jonathan Lea Network can help

Exercising the Right to Manage is a significant step. When handled carefully, it can give leaseholders greater control and confidence over how their building is run. 

JLN can advise on leaseholders, RTM companies, and directors on eligibility for RTM, company structure, statutory notices, landlord challenges, tribunal proceedings and post-RTM compliance.

Our focus is on clear, practical advice that helps clients make informed decisions and avoid common pitfalls. If you are considering exercising the Right to Manage, or if you are already partway through the process and need guidance, we would be pleased to discuss your position and next steps.

We usually offer a no-cost, no-obligation 20 minute introductory call as a starting point or, in some cases, if you would just like some initial advice and guidance, we will instead offer a one hour fixed fee appointment (charged from £250 plus VAT depending on the complexity of the issues and seniority of the fee earner).

Please email wewillhelp@jonathanlea.net providing us with any relevant information or call us on 01444 708640. After this call, we can then email you a scope of work, fee estimate (or fixed fee quote if possible) and confirmation of any other points or information mentioned on the call.

 

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This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited. 

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