Questions & answers

Last updated: 15/02/2026

General

What is "Right to Manage?"

The Right to Manage (RTM) is a statutory power that allows Leaseholders to take over the management of their building from the Landlord without having to prove any fault or mismanagement.

Introduced to give Leaseholders more control over their living environment, it enables a formally organized RTM Company to make decisions regarding service charges, maintenance, and insurance. Right to Manage is a powerful tool for Leaseholders who want transparency and direct oversight of how their building is run and how their money is spent.

Exercising the Right to Manage is a statutory process that follows a strict legal timeline:

1. Before spending any money, we need to meet a set criteria, which includes the need for a core group of Leaseholders representing at least 50% of the flats to commit to joining the RTM Company. We must also ensure that the building qualifies (e.g., at least 50% residential and two-thirds of flats on long leases).
2. We must incorporate a specific type of company, a "Company Limited by Guarantee," at Companies House. This company must use "prescribed" Articles of Association that identify it specifically as an RTM Company.
3. We then serve the "Notice of Invitation to Participate." We must send a formal notice to every qualifying Leaseholder in the building who has not yet joined the RTM Company. This gives them a final 14-day window to join before moving to the next stage.
4. Serve the "Notice of Claim" to the freeholder. The freeholder has at least one month to respond with a "Counter-Notice." They can either accept the claim or dispute it on very narrow technical grounds.
5. If the claim is accepted, we officially take over management on the "Acquisition Date" specified in the original notice (usually 3–4 months after the claim was served).

What is not covered by the "Right to Manage?"

RTM is not a transfer of ownership; the Landlord still owns the freehold of the land and the building’s structure. Leaseholders will still pay ground rent to the Landlords.

The RTM Company must still comply with all existing covenants in the lease and meet strict statutory management standards, just as the Landlord was required to do.

This process does not change the terms of the leases.

What are the benefits of RTM?

• Cost Control: Leaseholders decide which contractors to hire and can often reduce service charges by shopping around.
• Transparency: Leaseholders have full sight of where every penny of the service charges are spent.
• Prioritization: Leaseholders and their neighbors decide if the hallway needs painting now or if the roof repair is more urgent.

How do we qualify for RTM?

To exercise RTM, the building and the Leaseholders must meet a number of key conditions:

• At least 50% of the internal floor area (excluding common parts) must be residential.
• At least two-thirds of the flats must be held by "qualifying tenants" (originally granted a lease of more than 21 years).
• At least 50% of the total number of flats in the building must be members of the RTM Company.

RTM Company

Do I have to join the RTM Company?

No. Joining the RTM Company is voluntary. While the company must offer membership to every qualifying Leaseholder in the building, there is no legal requirement to sign up.

What benefits are there to joining the RTM Company?

Joining gives the Leaseholder a "seat at the table." Benefits include:

• Voting Rights: Members vote on major decisions, such as the appointment of new managing agents and approving large-scale works.
• Directorship: Only members can be appointed as Directors, allowing you directly oversee the building's finances and maintenance.
• A Collective Voice: You have a formal platform to hold the management to account alongside your neighbors.

Do we have to manage the building ourselves?

No. In fact, most RTM Companies appoint a professional managing agent of their own choice. The difference is that the agent now reports to the Leaseholders, rather than the Freeholder.

How long does it take?

Typically, the process takes 4 to 6 months from the moment the Leaseholders incorporate a RTM Company to the "Acquisition Date" when the RTM Company officially take overs the management responsibilities.

How much does it cost to set up?

The cost to set up a RTM Company has become significantly lower and more predictable largely due to the Leasehold and Freehold Reform Act 2024, which came into full effect in 2025.

Costs are estimated at between £200 to £500 per flat, depending on the required searches and any disputes.

Many Leaseholders find that the savings made on building insurance commissions in the first year alone are enough to pay back the entire setup cost of the RTM.

Do we have to pay the Freeholder’s costs?

Under the new 2024 rules, Leaseholders are no longer automatically liable for the Freeholder's legal costs.

What happens if I do not join the RTM Company?

Leaseholders who do not join the RTM Company remain a "Non-participating Leaseholder." These Leaseholders will still bound by the terms of their lease. The RTM Company becomes the new "Landlord" for management purposes.

Non-participating Leaseholders will still have to pay their service charges as usual, but will not have a vote in how that money is budgeted or which contractors are hired.

Non-participating Leaseholders will retain all their legal rights, such as the right to be consulted on major works and the right to challenge unreasonable service charges at a tribunal.

Can the RTM Company charge us "non-leaseholder" costs?

By and large, no. The RTM Company can only recover costs that are permitted under the terms of the existing leases. They cannot invent new types of charges (like an "administration fee" for the Directors' time) unless the lease specifically allows for it.

The only exception is the actual cost of management (the managing agent’s fee), which is a standard part of the Service Charge you already pay.

What will I have to pay the RTM Company?

Most RTM Companies are "Companies Limited by Guarantee." Usually, there is no "fee" to join, but Leaseholders may be asked for a nominal sum (often just £1.00) which represents the individual's maximum liability if the company were to be wound up.

The RTM Company may decide to charge a nominal Membership fee to cover administrative costs, such as storage for documentation, filing fees at Companies House, and the general overheads involved in maintaining a transparent and legally compliant corporate structure.

What if there are multiple people named on a single lease?

When a flat is owned by more than one person (for example, a couple or business partners), the law treats them as a single "qualifying tenant."

• To establish a RTM Company, all parties who own that lease must agree to join.
• Within the RTM Company, the voting power is per "qualifying tenant" not per Leaseholder. As such, Leaseholders will need to organise and align on a single vote.

What if I own multiple leases?

If a person own multiple flats within the building, they are a "qualifying tenant" for each flat, but their participation is slightly nuanced:

• For the purposes of starting the RTM, each flat counts towards the required 50% threshold to qualify.
• Once the RTM Company is formed, the person generally become a single member of the RTM Company, but their voting power is typically determined by the number of flats they own (e.g., one vote per lease held).

The specifics will be established per the RTM Company's Articles of Association.

If I don't join the RTM immediately, will I have to pay these set up costs when I join later?

No, a Non-participating Leaseholder usually won't have to pay a "buy-in" fee for the initial setup costs if they join the RTM Company at a later date. However, there are a few nuances to how those costs are handled and how they might affect late joiners indirectly:

• The Leaseholders who set up the RTM initially usually cover the legal and incorporation costs out of their own pockets. When a Leaseholder joins later, there is no statutory mechanism that forces them to "reimburse" those specific start-up costs. The RTM Company may ask for a small, nominal membership fee (as mentioned previously) to cover ongoing admin.

• In some cases, if the lease allows it, certain professional advice fees related to the transition might be recovered through the Service Charge. If this happens, Leaseholders will have already contributed their fair share through the standard Service Charge payments, regardless of whether the Leaseholder is a member of the RTM Company or not.

Is there a disadvantage to waiting?

The only real "cost" of joining later is lost influence. If the RTM Company makes major decisions in the first six months, such as voting on a new Management Company, these Leaseholders won't have had a vote on those contracts.

Similarly, if the Leaseholders cannot gain 50% participation, the RTM cannot be established and Hyde Group will remain as incumbent.

Are the directors paid?

No, being a Director of the RTM Company is an unpaid, voluntary, position.

Service Charges

How will Service Charges change?

While the legal framework of your service charge stays the same, the practical day-to-day costs usually change significantly. Because the RTM Company is run by the Leaseholders, there is no incentive for "profit-making." Instead, the RTM Company will focus solely on "value-seeking" via:

• No secret commissions
• Competitive tendering
• Lower management fees

What happens to our current service charge funds?

The law requires the Freeholder or outgoing manager to hand over all "uncommitted" service charge money and reserve funds to the RTM Company on the acquisition date (or as soon as possible after.)

What happens if a Leaseholder fails to pay their Service Charges?

The RTM Company will be responsible for collecting Service Charges, and as such resolving any disputes or legal proceedings necessary to collect those funds.

What about previous debts and grievances?

When an RTM Company takes over, it essentially "inherits" the management of the building, but it does not necessarily inherit the personal legal proceedings or financial debts of the Freeholder.

If a Leaseholder had service charge arrears before the RTM took over, that debt usually remains with the Freeholder.

If the building was neglected or repairs were done poorly under the old management, the RTM Company is now responsible for fixing those issues using the service charge fund. However, the RTM Company itself is not liable for the "bad decisions" of the previous manager.

The RTM Company is not obligated to represent tenants in former complaints.

What about Section 20 notices?

Right to Manage does not change Section 20 processes or obligations

If the previous Landlord started a Section 20 process before the RTM Company took over, it does not automatically "carry over" to the RTM Company. Because the RTM Company is a separate legal entity from the Freeholder, any notices served by the old Landlord are usually not legally valid for the RTM Company to rely upon.

If the Freeholder already signed the contract before the RTM acquisition date, the RTM Company usually inherits that contract as part of the management function. In this case, the consultation was the Freeholder's responsibility, and the RTM Company are simply managing the fallout. This makes it important to move quickly on the RTM process to avoid undesirable works.

Other questions

What about any commercial tenants in the building?

The RTM Company will become the "manager" for the commercial tenant. The RTM Company will be responsible for providing the services defined in the commercial tenants' leases. The commercial tenants will continue to pay their rent to the Freeholder, but they pay their service charges to the RTM Company.

Can the Freeholder join the RTM Company?

Yes, the Freeholder is legally entitled to become a member of the RTM Company.

Freeholders receive a single vote for each space they own in the building (i.e. a large commercial space or un-sold flats.) Under the Leasehold and Freehold Reform Act 2024, the Freeholder’s total voting power is capped at one-third of the total possible votes. This prevents a freeholder from having a majority vote and blocking the residents' decisions.

Can the Freeholder be a Director?

Yes, but in practice, not likely. The Freeholder has a statutory right to join the RTM Company. However, to be a Director of that company, they would need elected by other members. It is unlikely that this would occur.

Why not purchase the freehold?

If our objective is to ensure better maintenance and cost control of our building, right to manage is comparatively more cost effective and faster than a freehold purchase.

Whilst both a freehold purchase and a right to manage scheme would result in the Leaseholders managing the maintenance of the building, a freehold purchase is a considerably more complicated and expensive process.

Right to manage will not inhibit our ability to purchase the freehold at a later date.

What about Commonhold?

Commonhold is a form of property ownership that is designed to replace the complexities of leasehold with a simpler, more transparent model of collective ownership and democratic management. It allows the Leaseholders to own a flat outright and forever (rather than leasing it from a Landlord for a set number of years.) Under Commonhold, there is no "landlord-tenant" structure. All Leaseholders form a Commonhold Association that owns and manages the building's shared areas, such as the roof, hallways, and gardens.

Because the concept of a lease is entirely abolished, there is no ground rent, no expiring lease term to extend, and no risk of "forfeiture" for unpaid debts.

While the legal mechanism for commonhold has existed since 2004, the rules for converting existing buildings are complicated and stuck in a transition phase. The draft Commonhold and Leasehold Reform Bill (published January 27, 2026) aims to remediate these longstanding barriers.

Right to Manage is a suitable interim solution whilst the draft of the bill continues through Parliament, as it allows Leaseholders to strip management powers from an underperforming Landlord immediately, without the high upfront capital required for a full freehold purchase.

Does the RTM Company enforce leases?

Yes, an RTM Company has the power and the legal duty to enforce the covenants (terms) of the lease. However, its powers are different from those of a traditional Landlord.

The RTM Company:

• Is legally required to monitor whether Leaseholders are following their lease (e.g., regarding noise, pets, or illegal alterations) and must report breaches within 3 months.
• Can apply to the First-tier Tribunal (FTT) for a formal decision that a Leaseholder is in breach of their lease.
• Can sue a Leaseholder for financial compensation, injunction, or service charge arrears. A RTM Company may also apply to the Tribunal to vary leases to recover legal fees.
• Issue approvals where a Landlord's consent is required (i.e. alteration or to sub-let.)

Can the Freeholder stop a the Right to Manage process?

The Freeholder cannot "refuse" the right if the Leaseholders meet the above criteria. However, the Freeholder can challenge the process if the Leaseholders make technical errors in the notices.

What are the risks?

The most significant risks for a RTM Company is responsibility and cash-flow:

• Responsibility: Directors of the RTM Company (usually volunteer Leaseholders) have legal duties, including health and safety and fire safety compliance. Even if voluntarily, this exposes the Directors personally to significant financial risk. The RTM Company will purchase Directors & Officers Liability Insurance to offset this risk.
• Arrears: Directors (or their agent) will be responsible for chasing neighbors who don't pay their service charges.
• Disputes: Disagreements can arise between neighbors about how much to spend on certain projects, which will need to be resolved by the Directors or through a vote by the RTM Company members.
• Cash Flow Gaps: If multiple residents fall into arrears, the company may not have enough cash to pay for essential services like insurance or electricity for the common parts. Unlike a Freeholder, an RTM Company does not have a parent company or other sources of funds during a shortfall.