If your block is badly run, your service charge keeps climbing without explanation, or the managing agent answers to a freeholder you have never met, the Right to Manage is usually the first serious option to look at. It is a statutory right, under Part 2 Chapter 1 of the Commonhold and Leasehold Reform Act 2002, for leaseholders of flats to take over the management of their building through a company they control. You do not buy the freehold, you do not pay a premium, and you do not have to prove the freeholder has done anything wrong. The right runs in England and Wales, under separate sets of regulations for each; Scotland and Northern Ireland have no equivalent, and everything below describes the England position.
The rules changed materially on 3 March 2025, when sections 49 to 52 of the Leasehold and Freehold Reform Act 2024 came into force under SI 2025/131. The current non-residential floor-area limit is 50%, which brings thousands of mixed-use blocks above shops within reach, and a well-founded claim carries no freeholder costs bill. What follows is the current law: what RTM gives you, the qualifying tests, what it costs, and how it compares with the alternatives.
What the Right to Manage is
The Right to Manage lets qualifying leaseholders take over the "management functions" under their leases: repairs and maintenance of the structure and common parts, buildings insurance, setting and collecting the service charge, and complying with the landlord covenants that relate to management. The vehicle is an RTM company, a company set up by the leaseholders that serves the statutory notices and, on the acquisition date, steps into the management role the freeholder or their agent previously held. The gov.uk overview puts it in one line: leaseholders take over management responsibilities from the landlord without having to prove bad management.
Two features define the right. First, it is no-fault. Nothing in the qualifying rules asks whether the current management is good or bad; if the building and the participants qualify, the right can be claimed. Where a service charge grievance is what started the conversation, the statutory route for challenging a service charge you think is unreasonable stays open with or without a claim, and none of it has to be proved to take over management. Second, it is free of premium. Unlike buying the freehold, there is no price to agree and no valuation battle; the cost of RTM is professional fees, not a capital sum.
Equally defining is what RTM is not. The freeholder keeps the freehold. Your lease is untouched. The RTM company owns no property, earns no profit and is not an investment vehicle; it exists to manage the building and nothing else. That distinction matters throughout what follows.
Which buildings qualify
Section 72 of the 2002 Act sets three building-level conditions. The premises must be a self-contained building, meaning structurally detached, or a self-contained part of a building, meaning a vertical division that could be redeveloped independently with its own services (or services that could be separated without significant interruption to the rest). They must contain two or more flats held by qualifying tenants. And qualifying tenants must hold at least two-thirds of the flats in the premises.
Schedule 6 then excludes four categories:
- Substantially commercial buildings. Premises where the internal floor area of the non-residential parts, ignoring common parts, exceeds 50% of the whole. This is the threshold that section 49 of the 2024 Act raised from 25% on 3 March 2025. A flat above a small shop nearly always passed even the old test; a block above a substantial retail or office podium often failed it, and it is exactly those mixed-use buildings that the change brings within reach. Garages, parking spaces and storage areas used with a particular flat count as residential for this purpose.
- Split-freehold buildings. Where different persons own the freehold of different parts and any of those parts is itself self-contained, the chapter does not apply to the whole.
- Small resident-landlord conversions. Converted buildings (not purpose-built blocks) with no more than four units, a unit being a flat or any other separate set of premises, where the freeholder or an adult family member lives in one of them as their only or principal home and has done so for at least the last twelve months. Counting units rather than flats matters at the margin: four flats plus a shop is five units, which puts the building outside this exclusion.
- Local authority landlords. Premises where a local housing authority is the immediate landlord of any of the qualifying tenants.
If your building sits in none of those exclusions and meets the three section 72 conditions, it qualifies. Note that the 50% figure here is a floor-area cap on the building; it is a different test from the 50% participation threshold in the next section, and conflating the two is easy, because both are expressed as 50%.
For a clearly residential block the floor-area test needs no more than a glance. For a mixed-use building anywhere near the line, measure before you claim. The test is internal floor area, common parts disregarded, and the comparison is the non-residential parts taken together against the premises as a whole, so a building that feels "half shops" from the street can sit either side of 50% once stairwells and corridors drop out of the denominator. A borderline block should commission a measured survey before serving anything, because the freeholder is entitled to dispute qualification and floor area is exactly the kind of ground a counter-notice will take.
Who counts as a qualifying tenant, and how many must join
Under section 75, the qualifying tenant of a flat is the person who holds it under a long lease, which for this purpose broadly means a lease originally granted for more than 21 years. It does not matter whether the leaseholder lives in the flat: an owner-occupier, a buy-to-let landlord letting the flat on an assured shorthold tenancy, and an overseas investor are all equally qualifying tenants if they hold long leases. Leases within the business tenancy regime of Part 2 of the Landlord and Tenant Act 1954 are excluded, each flat has only one qualifying tenant at a time, and joint leaseholders count together as the qualifying tenant of their flat.
The participation threshold sits in section 79: on the day the claim notice is served, the RTM company's membership must include qualifying tenants of at least half the flats in the building. Where there are only two flats, both leaseholders must be members. So a six-flat block needs three participating flats, a ten-flat block needs five, and an eight-flat block needs four. Non-participants are not penalised; they simply are not members at the outset, though they can join later, and they continue paying their service charge to the new manager like everyone else.
Three numbers, then, and they are worth keeping apart. Two-thirds of the flats must be held by qualifying tenants for the building to qualify at all. The non-residential floor area must not exceed 50% of the building. And qualifying tenants of at least half the flats must be members of the RTM company when the claim is served. The first two are tests of the building; the third is a test of how many neighbours you can persuade.
The persuading is usually the real work. In blocks with a high proportion of let flats, the leaseholders you need are landlords who may live elsewhere, hold the flat through a company, or manage it entirely through an agent, so allow time for tracing and correspondence before you count anyone in. Aim for a margin above the bare half rather than the minimum: the threshold is tested on the day the claim notice is served, and a single sale, death or change of heart between planning and service can drop a minimum-participation claim below the line.
What you gain, and what you do not
The top misconception about RTM is that it makes the leaseholders owners. It does not, and the cleanest way to see the boundary is side by side:
| Transfers to the RTM company | Stays exactly as it was |
|---|---|
| Repairs and maintenance of the structure and common parts | Ownership of the freehold: the freeholder remains the freeholder |
| Arranging buildings insurance | Your lease and all its terms |
| Setting the service charge budget and collecting the charge | The remaining length of your lease, which keeps running down |
| Choosing, instructing or replacing the managing agent | Ground rent, which remains payable to the freeholder |
| Granting certain approvals under the leases (with notice to the landlord) | The freeholder's reversion, which they keep in full |
One thing does change in the freeholder's favour, and it belongs in neither column. From the acquisition date, section 74 of the 2002 Act gives them a new right to join the RTM company as a member: before that date they cannot join at all. The 2025 model articles cap the votes exercisable by landlord members at one third of the votes exercisable by qualifying tenants, so a freeholder who joins can attend, speak and vote without ever outvoting the leaseholders who claimed the right.
The right-hand column deserves emphasis. Ground rent is income from the freehold interest, not a management function, so it continues, and the ground rent rules, including what the 2024 Act does and does not yet change, are untouched by RTM. Likewise your lease does not get any longer because the block is leaseholder-managed. If short leases are the real problem in your building, management control does not solve it, and the comparison you need is lease extension against freehold purchase rather than this page.
What the left-hand column buys you in practice is accountability. The service charge does not disappear, and an RTM company is bound by the same reasonableness and consultation machinery as any landlord, but the people setting the budget now answer to the leaseholders funding it. Blocks that were paying a freeholder-appointed agent above market rate, or carrying insurance placed through commission-heavy arrangements, are where the savings appear.
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What a claim costs, and who funds it
Since 3 March 2025 a well-founded claim carries no freeholder costs bill: sections 87A and 87B of the 2002 Act, inserted by section 50 of the 2024 Act, leave the RTM company liable only where a claim is withdrawn after being pursued unreasonably. The mechanics, and where that residual risk sits, are set out in our RTM process guide.
That leaves your own side's costs, which for a go or no-go decision are the only figures that matter. They are illustrative orders of magnitude, not quotes; the drivers are block size, the number of landlords and intermediate parties who must be served, and whether the freeholder disputes entitlement.
| Cost item | Illustrative range | What drives it |
|---|---|---|
| Forming the RTM company | £100 (plus any formation agent's fee) | Companies House digital incorporation fee, £124 on paper |
| Solicitor: notices and an uncontested claim | £1,500 to £3,500 | Block size, number of parties to serve, title complexity |
| Contested claim (tribunal proceedings) | Several thousand pounds more | Grounds of dispute, expert evidence, hearing length |
| Handover items at acquisition | Hundreds, not thousands | Insurance from day one, agent onboarding, records transfer |
Who funds it is a decision, not a rule. The statutory costs fall on the RTM company, which at claim stage has no service charge income, so in practice the participating leaseholders contribute, usually equally per flat, sometimes with an agreement to reimburse from later service charge surpluses. Getting that agreed in writing before the first invoice arrives is what stops the arrangement souring when the bill is larger than the estimate. For a leaseholder who lets their flat out, the tax treatment splits three ways. Their ongoing service charges are revenue expenses against rental income. The one-off legal costs of the claim itself are not straightforwardly revenue: they buy a lasting right rather than service the letting, so treat them as a capital-risk item and take advice before deducting. And any contribution that funds structural improvement works, as opposed to repairs, is capital and relieved only on disposal. Keep the paperwork that shows which is which, because the three are easy to run together in a single transfer to the company.
One point on the costs rules is worth acting on at decision stage rather than later: section 87A preserves liability where the parties have agreed it, so nothing from the freeholder's side that undertakes to cover their costs should be signed. Since March 2025 there is no statutory reason to give that undertaking.
A worked go or no-go: six flats above two shops
Meadow Court is a converted block: six flats on long leases above two shops, with the commercial units making up about 40% of the internal floor area. All figures here are illustrative. Sunita lets her flat to tenants, Mark and Elena live in theirs; the freeholder is an investment company whose agent has raised the service charge 30% in two years.
The building tests: six of six flats are held by qualifying tenants, comfortably over two-thirds. Non-residential floor area is 40%, under the 50% cap, so the building qualifies. Before 3 March 2025 it did not: 40% exceeded the old 25% limit, and this block is precisely the kind the 2024 Act brought within reach. Participation: four of the six leaseholders will join, which clears the half-the-flats threshold with a margin, sensible in case one sells before the claim notice is served. Costs: formation of £100 plus an estimated £2,500 of solicitors' fees, so £2,600 split four ways, is £650 each, with no freeholder bill to add if the claim is well founded. Against a service charge running at £2,400 a flat and rising, the group treats that as one year's excess and decides to go. For Sunita, her service charges sit against her rental income as revenue expenses; her £650 share of the claim costs is the item to take advice on.
RTM against the alternatives
RTM is one of four responses to a badly run block, and choosing between them is mostly a question of what your real problem is.
| Route | Fault required? | What you get | Cost order of magnitude (illustrative) |
|---|---|---|---|
| Right to Manage (CLRA 2002) | No | Management control through a leaseholder company; ownership unchanged | Professional fees only; often £1,500 to £3,500 shared, no premium |
| Collective enfranchisement (LRHUDA 1993) | No | The freehold itself: reversion, ground rent, ability to grant new long leases | Premium commonly five figures per flat, plus both sides' professional costs |
| Tribunal-appointed manager (LTA 1987 Part 2) | Yes, grounds must be proved | An independent professional manager appointed by the tribunal, not leaseholder control | Tribunal proceedings; typically low thousands in fees |
| Replacing the managing agent | No, but freeholder must agree | A better agent, if the freeholder cooperates; no transfer of rights | Nil to minimal |
The decision logic runs like this. If the freeholder is responsive and the only problem is the agent, ask for a change first; it costs nothing. If the freeholder will not engage and the leaseholders want control, RTM is the proportionate tool: no fault to prove, no premium, and since March 2025 no exposure to the freeholder's costs on a sound claim. If the block cannot muster half the flats, or the management failures are serious and provable, the 1987 Act manager route works without a participation threshold, at the price of handing control to an independent professional rather than to the leaseholders. And if the underlying issue is shortening leases or leaseholders want the asset itself, collective enfranchisement does what RTM cannot, at a materially higher cost; the trade-offs are worked through in our lease extension versus freehold purchase guide. One sharp contrast worth knowing: enfranchisement claims still carry liability for the freeholder's non-litigation costs under section 60 of the 1993 Act, because the 2024 Act's costs reforms for that regime are not yet in force, whereas the RTM costs reform is. Our ledger of what is and is not yet in force under the 2024 Act tracks exactly this kind of phased commencement.
RTM and enfranchisement are not mutually exclusive over time. Plenty of blocks take RTM first as the low-cost step, run the building well for a few years, and enfranchise later once the group has the appetite and the capital. Nothing about claiming RTM prejudices a later freehold purchase.
If you decide to go ahead
A decision to proceed turns into two practical workstreams. The first is the vehicle: RTM claims are made by a company limited by guarantee with prescribed articles, and setting up and running an RTM company covers formation, membership, directors' duties and the filings the company owes every year. The second is the claim itself, a fixed statutory sequence of notices with deadlines attached, walked step by step in our RTM process and timeline guide, which is also where the timings live: an uncontested claim cannot lawfully complete in under about four and a half months from the first notice, and commonly takes four to six, while a disputed one adds a tribunal stage and often runs past a year.
Settle the floor-area position before anyone drafts a notice. If the building is anywhere near the 50% line, a measured survey is the cheapest thing the group will buy, because every other step depends on whether the building qualifies. Count the flats held by qualifying tenants next, then count who will actually join, and only then spend money on notices: an hour with a solicitor who runs RTM claims is worth more once those three numbers are known than before. Where participants let their flats, or the block is weighing RTM against buying the freehold, put the figures in front of a property tax specialist first, so the group chooses the route once rather than twice.