Right to Manage Company for Leaseholders

Some Leaseholders can choose to take control of certain management responsibilities that their freeholder/landlord is responsible for by setting up a Right to Manage company (RTM).

This doesn't mean the leaseholders own the freehold; however, it offers an opportunity for them to manage their maintenance of the freehold and communal areas regardless of whether the freeholder is in breach of their duties to the leaseholders.

The right to manage your freehold is set out in statutory law in the Commonhold and Leasehold Reform Act 2002.

On the 3rd of March 2025, some changes from the Leasehold and Freehold Reform Act 2024 came into force which affect Right to Manage Claims.

We run through the right-to-manage process, how long it takes, and the right-to-manage costs.

What responsibilities does the Right to Manage Company take over?

A freeholder is usually responsible for carrying out repairs and maintenance to the building and communal areas as well as ensuring that the property is properly insured.

The freeholder collects service charges from the leaseholders to pay for this. Under the Commonhold and Leasehold Reform Act 2002 eligible leaseholders have the right to take over these responsibilities. The responsibilities could include:

• maintenance of the lifts;
• cleaning of the communal areas;
• negotiating new contracts with utility and building insurance providers;
• maintenance of the garden; and
• planning of major works.

The Right to Manage Process in 4 simple steps

You have to get majority support from the other leaseholders, then form the company, then inform your freeholder. You may wish to seek legal advice: right to manage, from a specialist solicitor before you begin:

1
Establish Eligibility and Support

Although right to manage is a simpler process than the one which accompanies Collective Enfranchisement, there are some similarities in the eligibility criteria:

• At least 2/3 of the flats in your block must be let to ‘qualifying tenants’, i.e. those with an original lease granted for more than 21 years. You don’t have to have been resident in the flats now or in the past; however
• You have to have enough qualifying tenants in favour of right to manage such that their number is or exceeds 50% of the flats in the block (both of you if only 2 in the block).
• You cannot have more than 50% of your block given over to non-residential (i.e. commercial) use.
• You cannot have a resident freeholder in your block where the block isn’t purpose-built, there’s 4 or less flats and one of these flats is where the freeholder or adult member of their family has lived for 12 months.
• You have to form a right to manage company and this must be formed of at least 50% of the qualifying tenants.
• If the property has more than one block, you can only pursue right to manage on a block-by-block basis, not all at once (although all blocks could eventually be managed by the same company).

2
Form the Right to manage Company

This is essential – the company must manage the block, not individual leaseholders – and the company’s Articles of Association must reflect its purpose.

You and your fellow leaseholders can incorporate the company yourselves or instruct a solicitor to do so. You have to appoint a chairman, secretary and directors from among the leaseholders, then invite all qualifying leaseholders to join – you cannot exclude anyone.

You must inform the qualifying leaseholders via a Section 78 Notice Inviting Participation. This notice must set down various matters such as that the company will take over the enforcement of leases and granting of approvals, if relevant.

As of March 2025, freeholders and landlords who are members of RTM companies will be entitled to one vote. Landlord votes will be capped at one-third of the total votes exercisable by qualifying tenants.

It's worth getting a survey before the right to manage takes effect, so you can start the statutory consultation procedure for major works that need to be undertaken urgently.

You should ensure that your invitation notice is properly served, including, for example, providing contact details for non-resident flat owners who are to be served with the invitation notice (they have to be served with a copy at such different address as they have notified you of previously.

A landlord often uses bad service of the invitation notice as grounds for setting aside the RTM notice. It helps if you can obtain evidence from each served flat owner of satisfactory receipt of the invitation notice. Note any flat owners who respond to the invitation notice asking for membership as members of the company.

If you are intending to employ a management agent, you must state their name and address and if you intend to employ the existing one. The Articles of Association must be stated or, at least, there should be clear details about where these can be found. You should consider appointing managing agents to cover everywhere except the smallest blocks.

You must invite the freeholder to join the company. As of March 2025, the new costs regime will generally make each party liable for their own costs in connection with an RTM claim, save for in limited circumstances such as where there is a costs order made by a court or Tribunal.

3
Serve the Notice of Claim

You have to serve your Section 79 Notice of Claim on your freeholder, but not until at least 14 days after you’ve served your Notice Inviting Participation. The Notice of Claim must:

• allow at least 1 month from the date of service for the freeholder to serve a Counter-Notice;
• propose a date of acquisition at least 3 months after the date proposed for the freeholder’s Counter-Notice; and
• state all relevant particulars about the qualifying tenants, the right to manage company, and the eligibility of the building for right to manage. As stated, the Notice must inform the freeholder of their right to membership of the company.

NB Unlike the procedure for Lease Extensions and Collective Enfranchisement, ‘a [right to manage} claim notice is not invalidated by any inaccuracy in the particulars’, however it must inform the freeholder that they can alert the company of any inaccuracies in the Notice.

Similar to the procedure for Lease Extensions and Collective Enfranchisement, your freeholder, on receipt of the Notice of Claim, can issue a Section 83 Right of Access Notice, requiring access to flats in your block for inspection, and those affected then have 10 days to respond.

4
Receive Freeholder’s Counter-Notice and Contractor/Contract Notices

Your freeholder may serve a Section 84 Counter-Notice; this either accepts your claim or rejects it, giving grounds. If your claim is disputed and you wish to proceed with it, you have 2 months from receipt of the Counter-Notice to apply to the Tribunal, who will make a binding ruling.

Contractor and Contract Notices

Management of any block normally involves employing outside contractors to perform various services, such as electricians, plumbers, roofers, etc.

The freeholder is statutorily obliged to serve Section 92 Contractor and Contract Notices if they agree to the right to manage claim and they should do this ‘as soon as possible’ or at latest by the determination date stated in the Claim Notice, or, should the case be disputed, by the determination date set, or ‘as soon as is reasonably practicable after’.

The right to manage company then serves the Section 93 Duty to Provide Information Notice. The freeholder must respond within 28 days of the notice, subject to the proviso that he is not obliged to do so until after the acquisition date.

The acquisition date will be:

• where the freeholder served a counter-notice agreeing the claim, or did not serve a counter-notice, the date set in the Notice of Claim;
• where a disputed claim is confirmed by the First-tier Tribunal (Property Chamber), three months after the final date of the Tribunal determination;
• where a freeholder disputes the claim but subsequently agrees, three months after the date of the landlord’s agreement.

A Contractor Notice has to be served on all contractors appointed by the freeholder and essentially tell them that the right to manage company is taking over the management of contractors. They must state the name and registered address of the company, the acquisition date and that if the contractor involved, with reference to the relevant contract, wishes to carry on providing services, they should get in touch with the right to manage team.

A Contract Notice has to be served on the right to manage company and must include the particulars of each contract and a statement advising the company to contact those contractors it intends to retain when it takes over the block’s management.

The freeholder does not have to provide copies of any contracts but must inform the company of their existence.

The freeholder can take up membership of the company and the company has to allocate votes to the freeholder according to their holding in the building.

The freeholder must transfer all uncommitted service charges on the acquisition date or 'as soon after that date as is reasonably practicable'.

Get a Survey before you take over

It's worth getting a survey before the right to manage takes effect so you can start the statutory consultation procedure for major works that need to be undertaken urgently. We can offer great fees on surveys for multiple leaseholders in the same block.