Right to Manage a Block of Flats UK: What You Need to Know

If you live in a leasehold flat and your building is poorly managed — with high service charges, slow repairs, inadequate insurance, or a freeholder who simply isn't engaged — the Right to Manage (RTM) could be a powerful tool. RTM allows leaseholders to take over the day-to-day management of their block without purchasing the freehold, and the freeholder cannot simply refuse. Here is what you need to know.

What Is the Right to Manage?

The Right to Manage is a statutory right introduced by the Commonhold and Leasehold Reform Act 2002. It allows qualifying leaseholders to take control of building management from the freeholder (or their appointed managing agent) by setting up a company — an RTM Company — which then assumes responsibility for building management functions.

Crucially, the freeholder cannot withhold consent to an RTM claim simply because they disagree with the decision. The only grounds for challenging an RTM claim are that the qualifying conditions are not met (particularly, that the required number of leaseholders are not participating).

RTM does not transfer ownership of the freehold. The freeholder continues to own the building — they simply lose the right to manage it. Ground rent (if any) continues to be payable to the freeholder.

Who Qualifies?

To exercise the Right to Manage, the following conditions must all be met:

• The building must be a residential block — a self-contained building (or part of a building) containing at least 2 flats
• At least two-thirds of the flats in the building must be held on long leases (originally granted for more than 21 years)
• At least 50% of all qualifying tenants (long leaseholders in the block) must participate in the RTM claim
• No more than 25% of the internal floor area may be used for non-residential purposes (e.g., commercial ground floor units — if commercial use exceeds 25%, the RTM right is lost)
• There is no ownership period requirement — unlike the statutory lease extension route, you do not need to have owned for 2 years

Mixed-use buildings with significant commercial elements can cause RTM eligibility to fail, so this should be checked carefully at the outset.

The RTM Process: Step by Step

Step 1 — Form an RTM Company

The first step is to incorporate a Right to Manage Company — a private company limited by guarantee, using the Companies Act memorandum and articles prescribed under the Commonhold and Leasehold Reform Act 2002. The name must include "Right to Manage" or "RTM" and "Company" or "Co.".

All participating leaseholders become members of the RTM Co. A specialist solicitor can incorporate this for around £200–£500. It can also be done directly via Companies House, though legal guidance is strongly recommended given the prescribed articles requirements.

Step 2 — Serve a Notice of Invitation to Participate

Before serving the formal claim notice, the RTM Company must invite all qualifying tenants who are not yet members to join by serving a Notice of Invitation to Participate. The notice must be served at least 14 days before the claim notice.

Step 3 — Serve the Claim Notice

The RTM Company serves a formal Claim Notice on the freeholder (and any intermediate landlord). The notice must state the acquisition date — which must be at least 3 months after the date of the claim notice — and provide details of the RTM Company.

The freeholder has 1 month to serve a Counter-Notice if they wish to dispute the claim (on the grounds that the qualifying conditions are not met). If the freeholder does not serve a valid Counter-Notice, the RTM Company acquires management on the acquisition date automatically.

Step 4 — Dispute Resolution (if needed)

If the freeholder serves a Counter-Notice alleging that the conditions are not met (for example, that fewer than 50% of qualifying tenants are participating), the RTM Company can apply to the First-tier Tribunal (Property Chamber) to determine whether the right exists.

In the vast majority of RTM claims, the freeholder does not dispute the claim, and the process completes on the acquisition date.

Step 5 — Acquisition

On the acquisition date, management functions transfer to the RTM Company. Existing contracts (cleaning, insurance, maintenance) typically transfer. The outgoing manager must hand over all relevant documentation, accounts, and keys.

What Responsibilities Does the RTM Company Take On?

This is where many leaseholders underestimate what they are signing up for. The RTM Company takes on all building management functions, including:

• Building insurance — obtaining and maintaining adequate buildings insurance on a reinstatement-cost basis
• Service charge collection and management — collecting service charges from leaseholders, holding funds in a designated client account (required by law)
• Repairs and maintenance — responding to routine maintenance requests and managing major works (including Section 20 consultation obligations for works over £250 per leaseholder)
• Statutory compliance — fire risk assessment (FRA, annual or as required), electrical installation condition report (EICR), gas safety certificates, lift inspections, asbestos management plan
• Reserve/sinking fund — building and managing a reserve fund for future major works
• Enforcement — enforcing lease covenants (nuisance, alterations, subletting without consent)
• Accounting and Company House filings — annual accounts, confirmation statements for the RTM Co

The RTM Company can appoint a professional managing agent to handle day-to-day management (typically £30–£80 per unit per month), or leaseholders can self-manage. Self-management is feasible for small, simple blocks with engaged leaseholders — but the compliance obligations and potential liability of getting it wrong should not be underestimated.

What Does It Cost?

The freeholder's reasonable legal costs payable by the RTM Company are capped under the 2002 Act — they cannot demand unlimited legal fees. The cap is around £500 in straightforward cases, though this can be disputed.

Note that RTM does not entitle leaseholders to take over collection of ground rent — that remains payable to the freeholder under the existing leases.

Risks and Common Pitfalls

Underestimating the management burden. Building management is complex, legally demanding, and time-consuming. Statutory compliance failures can lead to enforcement action, fines, and — in the case of fire safety failures — criminal liability. The responsibilities are real.

Inadequate reserve fund. A block with no sinking fund that then faces a major roof replacement or lift refurbishment will need to levy large service charge demands at short notice. RTM Companies should establish a reserve fund study (a condition survey assessing future major works liabilities) as a priority.

Contractor vetting. Selecting competent contractors at reasonable prices — and ensuring they carry adequate insurance — is an ongoing responsibility. Using unvetted contractors can lead to poor work quality and liability.

Participation falling away. Once RTM is acquired, leaseholders sometimes lose interest in attending meetings and managing the company. The RTM Company still has legal obligations regardless of engagement levels.

Section 20 Major Works consultation. Any major works contract exceeding £250 per leaseholder requires statutory consultation with all leaseholders under Section 20 of the Landlord and Tenant Act 1985. Failure to consult limits the recovery of costs in service charges.

Alternative: Collective Enfranchisement

If the majority of leaseholders want more permanent control, collective enfranchisement — buying the freehold collectively — may be preferable. It costs more upfront (legal fees, surveyor's costs, and the purchase price of the freehold), but gives leaseholders complete control, eliminates ground rent, and allows all leases to be extended to 999 years at a peppercorn ground rent at minimal cost.

RTM and collective enfranchisement are not mutually exclusive — many blocks exercise RTM first to improve management, then proceed to enfranchisement when they have the funds and organisation in place.

Practical Summary

1. Check eligibility — at least 2/3 of flats on long leases, 50% participation required
2. Engage a specialist solicitor early — RTM notices are prescribed and errors can invalidate the claim
3. Incorporate the RTM Company correctly (prescribed articles, correct naming)
4. Plan for ongoing management responsibilities before you acquire — don't underestimate the burden
5. Budget for legal costs (£1,500–£4,000), managing agent fees if applicable, and compliance costs
6. Consider whether collective enfranchisement might be a better long-term solution

Key references:

• Leasehold Advisory Service (LEASE): lease-advice.org — free government-funded guidance on RTM
• RICS: rics.org — guidance on service charges and managing agent standards
• ARMA (Association of Residential Managing Agents): arma.org.uk — member managing agents
• Commonhold and Leasehold Reform Act 2002
• Landlord and Tenant Act 1985 (service charges and Section 20 consultation)

For a comprehensive step-by-step walkthrough of the full RTM process — including the Notice Inviting Participation, claim notice requirements, tribunal procedure, and managing agent selection criteria — see our right to manage: how leaseholders can take control guide.