Right to Manage Company Setup and Support
Take control of your building with expert right to manage guidance. We help leaseholders form an RTM company, navigate the statutory process, and deliver professional block management once the right to manage is acquired.
What Is the Right to Manage?
The right to manage is a powerful statutory right introduced by the Commonhold and Leasehold Reform Act 2002. It allows qualifying leaseholders in a block of flats to take over the management functions of their building by forming a right to manage company, commonly known as an RTM company. Crucially, leaseholders do not need to prove any fault or mismanagement on the part of the current freeholder or managing agent to exercise this right.
The right to manage process transfers responsibility for day-to-day building management from the freeholder to the RTM company. This includes service charge collection and administration, building maintenance and repairs, insurance arrangement, regulatory compliance, and the appointment of contractors and managing agents. The freeholder retains ownership of the freehold and any rights to ground rent, but loses control over how the building is managed.
For many leaseholders, the right to manage represents the most practical route to better block management. It is simpler and less expensive than collective enfranchisement (purchasing the freehold), and it gives residents genuine control over the quality and cost of the services they receive. The RTM company directors, elected from among the leaseholders, make the strategic decisions about how the building is managed and which managing agent to appoint.
At Block, we support leaseholders through every stage of the right to manage process, from initial eligibility assessment through to ongoing RTM block management once the transfer is complete.
How to Set Up a Right to Manage Company
Setting up a right to manage company involves a series of legal and administrative steps that must be followed precisely. Errors at any stage can invalidate the entire claim, so it is important to seek professional guidance. Here is an overview of the right to manage process.
Gauge Leaseholder Support
The first step is to establish whether sufficient leaseholders support the right to manage. You need membership from at least half the qualifying tenants in the building. Hold an informal meeting or circulate a letter to gauge interest and explain the benefits and responsibilities of RTM.
Incorporate the RTM Company
The RTM company must be incorporated at Companies House as a private company limited by guarantee. The company articles must comply with the specific requirements set out in the RTM Companies (Model Articles) Regulations. Directors are appointed from among the participating leaseholders.
Serve Notices of Invitation to Participate
Before the claim notice is served, the RTM company must invite all qualifying tenants in the building to become members. This notice must be in the prescribed form and gives leaseholders at least 14 days to join. This ensures every leaseholder has the opportunity to participate.
Serve the Claim Notice
The RTM company serves a formal claim notice on the landlord, any other party to the lease, and any existing managing agent. The notice must be in the prescribed form and specify the date on which the RTM company intends to acquire management functions, which must be at least three months from the date of the notice.
Counter-Notice Period
The landlord has one month from receiving the claim notice to serve a counter-notice. They can either accept the claim or dispute it on specific grounds. If no counter-notice is served, the claim is deemed accepted. If the claim is disputed, the RTM company can apply to the First-tier Tribunal for a determination.
Acquire Management Functions
On the acquisition date specified in the claim notice, all management functions transfer to the RTM company. A handover process begins where the outgoing managing agent transfers financial records, insurance documents, contractor information, compliance certificates, and any reserve funds to the RTM company or its appointed managing agent.
Right to Manage Qualifying Criteria
Not every building is eligible for the right to manage. The Commonhold and Leasehold Reform Act 2002 sets out specific qualifying criteria that both the building and the participating leaseholders must meet. Understanding these criteria at the outset is essential to avoid wasting time and money on an invalid claim.
Building Requirements
- •The building must be a self-contained building or part of a building
- •It must contain at least two flats held by qualifying tenants
- •At least two-thirds of the total flats must be held by qualifying tenants on long leases
- •The non-residential floor area must not exceed 25 percent of the total internal floor area
- •The building must not be on the exempt list (certain local authority and housing association properties)
Leaseholder Requirements
- •Qualifying tenants must hold long leases, generally those originally granted for more than 21 years
- •Membership of the RTM company must include at least half the qualifying tenants
- •There is no minimum period of ownership required
If you are unsure whether your building qualifies for the right to manage, we offer a free initial eligibility assessment. Contact us with your building details and we will advise you within 48 hours.
Right to Manage Pros and Cons
Before committing to the right to manage process, it is important to understand both the advantages and the responsibilities that come with taking control of your building management.
Advantages
- •Choose your own managing agent and negotiate competitive fees
- •Greater control over service charge budgets and expenditure
- •No need to prove fault or mismanagement by the current landlord
- •Ability to appoint preferred contractors and insurance brokers
- •Improved building maintenance and responsiveness to resident needs
- •Simpler and less expensive than purchasing the freehold through collective enfranchisement
Responsibilities
- •RTM company directors take on legal responsibilities for block management
- •Initial setup costs including solicitor fees and company formation
- •Ongoing obligation to comply with Companies House filing requirements
- •Time commitment required from volunteer directors
- •Risk of the claim being challenged if the process is not followed correctly
- •Responsibility for all compliance and building maintenance obligations transfers to the RTM company
How Much Does Right to Manage Cost?
The right to manage costs can be broken down into two categories: the initial setup costs and the ongoing management costs once the RTM company has acquired management functions.
Initial Setup Costs
Setting up an RTM company typically costs between 2,000 and 5,000 pounds, depending on the complexity of the building and whether the landlord disputes the claim. The main costs include Companies House incorporation fees of around 12 to 50 pounds, solicitor fees for preparing and serving the claim notice, which typically range from 1,500 to 3,500 pounds, and any tribunal costs if the claim is disputed.
An important feature of the right to manage is that the landlord must pay their own legal costs, regardless of the outcome. This is different from collective enfranchisement, where leaseholders may have to contribute to the landlord reasonable costs. However, if the RTM claim fails at tribunal, the leaseholders will bear their own costs, which is why getting the process right first time is so important.
Ongoing Costs
Once the RTM company acquires management functions, the ongoing costs include the managing agent fees, which are typically charged on a per-unit basis and included in the service charge budget. Companies House annual confirmation statement fees of 13 pounds, directors and officers insurance, and any company secretary or accountancy costs also apply. These ongoing costs are usually funded through the service charge.
At Block, we offer competitive RTM block management packages that include full administrative support for the RTM company itself, including Companies House filings, board meeting facilitation, and AGM organisation. Contact us to discuss right to manage costs specific to your building.
RTM Company Directors Responsibilities
Directors of an RTM company hold important legal responsibilities under both company law and leasehold management legislation. Understanding these responsibilities before taking on the role ensures directors can fulfil their duties effectively and avoid personal liability.
Fiduciary Duties
Directors must act in the best interests of the company and its members, exercise reasonable care and skill, avoid conflicts of interest, and not accept benefits from third parties. These duties are set out in the Companies Act 2006.
Financial Oversight
Directors are responsible for ensuring proper financial management, including approving budgets, monitoring expenditure, and ensuring that service charges are collected and applied appropriately. Learn about our approach to service charge management.
Compliance Obligations
The RTM company takes on the responsible person duties under fire safety legislation and other compliance obligations. Directors must ensure these are met, typically by appointing a competent managing agent to handle compliance.
Companies House Requirements
Directors must ensure the company files its annual confirmation statement at Companies House, maintains an up-to-date register of members and directors, and notifies Companies House of any changes to the company details.
The good news is that most of these responsibilities can be delegated to a professional managing agent. At Block, we provide comprehensive support for RTM company directors, handling the administrative burden so directors can focus on strategic decisions about their building. Our leasehold management expertise ensures every obligation is met professionally and on time.
Frequently Asked Questions About Right to Manage
What is the right to manage and who qualifies?
The right to manage is a statutory right under the Commonhold and Leasehold Reform Act 2002 that allows qualifying leaseholders in a block of flats to take over the management of their building without having to prove fault on the part of the current landlord or managing agent. To qualify, the building must be a self-contained premises with at least two flats held by qualifying tenants on long leases, and at least two-thirds of the flats must be held by qualifying tenants. The building must not be on an exempt list, and the non-residential floor area must not exceed 25 percent of the total internal floor area.
How long does the right to manage process take?
The right to manage process typically takes between three and six months from the initial decision to form an RTM company through to the formal acquisition of management functions. The key milestones include incorporating the RTM company at Companies House, which takes a few days, serving the claim notice on the landlord and existing managing agent, which starts a one-month counter-notice period, and then a further two-month period before the RTM company acquires management functions. If the landlord disputes the claim, the matter may be referred to the First-tier Tribunal, which can extend the process significantly.
Can the landlord block right to manage?
The landlord cannot simply refuse the right to manage claim, but they can serve a counter-notice disputing its validity. Common grounds for dispute include claiming that the building does not meet the qualifying criteria, that the RTM company was not properly constituted, or that the claim notice was served incorrectly. If a counter-notice is served, the RTM company can apply to the First-tier Tribunal Property Chamber for a determination. The tribunal will assess whether the statutory requirements have been met and either approve or reject the claim.
Do I need a solicitor for right to manage?
While there is no legal requirement to instruct a solicitor for the right to manage process, it is strongly advisable. The RTM process involves strict procedural requirements, and errors in the claim notice or the formation of the RTM company can invalidate the entire claim. A solicitor experienced in leasehold enfranchisement law can ensure the RTM company is properly constituted, the claim notice is correctly drafted and served, and any counter-notice from the landlord is properly addressed. At Block, we work alongside specialist RTM solicitors to guide you through every step.
What happens after right to manage is acquired?
Once the RTM company acquires management functions, it becomes responsible for all management obligations previously held by the landlord under the leases. This includes collecting service charges, arranging buildings insurance, managing maintenance and repairs, ensuring regulatory compliance, and handling Section 20 consultations for major works. The RTM company directors must fulfil these responsibilities either directly or by appointing a professional managing agent. Most RTM companies choose to appoint a managing agent to handle day-to-day administration while retaining strategic decision-making authority.
Ready to Take Control of Your Building?
Whether you are considering the right to manage for the first time or looking for a new managing agent for your existing RTM company, we are here to help. Our team has guided over 45 successful RTM transitions and provides ongoing block management to RTM companies across the UK.