Legislation allows leaseholders to have the statutory right to take on the management of their development from the Freeholder without having to purchase the Freehold. The Commonhold and Leasehold Reform Act 2002 introduced the Right To Manage (RTM); allowing those that pay for the maintenance of their building (lessees) the right to ‘hire and fire’ by setting up a Right To Manage Company. No permission from the landlord or proof of mismanagement is needed. If a Right To Manage is successful, it will give leaseholders more say and control over their development including costs.
We have great experience in undertaking the Right To Manage (RTM) process and we would be happy to help those who are interested in exploring this option. We have helped sites of all different sizes acquire the Right To Manager successfully.
The UK’s Right to Manage (RTM) process saw significant updates under the Leasehold and Freehold Reform Act 2024, with key provisions taking effect 3rd March 2025, making it easier for leaseholders to claim control: increasing the non-residential floor space limit to 50%, removing mandatory freeholder cost recovery in non-contentious claims, and making it simpler to qualify by reducing procedural barriers, with further reforms anticipated.
Key Legislative Changes:
- Increased Non-Residential Limit: Buildings with up to 50% non-residential space (previously 25%) can now qualify for RTM, opening it to more mixed-use properties.
- Cost Recovery for Landlords: In standard, non-contentious claims, landlords generally can’t recover their legal costs from the RTM company or leaseholders, reducing financial burdens.
- Simplified Claims: The new rules aim to prevent claims from failing due to minor procedural errors, giving leaseholders greater control and less complexity.
The RTM Process Basics:
Form an RTM Company: A company must be set-up and incorporated (with Articles/Memorandum of Association) to manage the property and at least 50% of other leaseholders must be in support of carrying out the RTM.
Qualifying Leaseholders: Must have a long lease, and for RTM, at least two-thirds of the flats must have qualifying leases.
Notice of Invitation to Participate is sent to leaseholders who have not already signed to be members of the RTM Company
Claim Notice: The RTM company serves a notice on the landlord.
Landlord Response: Landlord must respond within a set timeframe.
Claim Acquisition: Leaseholders take over management, appointing their own manager.
The above is a very simplified version of the RTM process. RTM’s can take up to six months to complete if not contested.
What’s Next?
While the 2024 Act brought major changes, the Law Commission proposed further reforms, and some remain outstanding, potentially for a future Bill, making it a current topic for leaseholders to watch. We welcome the time when a mixed tenure development can carry out a Right To Manage, so that a development consisting of both houses and flats which pay a service charge, can carry out the process, empowering a whole development to take control of the management under one entity.