Renters' Rights Act 2025, Phase 1 commencement
Transition readiness pack
England

Leasehold Management

Block Management — Freeholder and Managing Agent Obligations

Block management: LTA 1985 service charge obligations (s.19 reasonableness; s.20 consultation; s.21 summary of costs; ss.47–48 demand formality); Right to Manage under CLRA 2002 as reformed by LRHUDA 2024; Building Safety Act 2022 accountable person duties; managing agent regulation (RICS Code; property redress scheme; CMP; FCA Consumer Duty on insurance commissions).

15 min readUpdated 7 June 2026Last reviewed: 17 May 2026block-managementservice-chargeright-to-managebuilding-safety

Service Charges — LTA 1985 Obligations

The LTA 1985 ss.18–30B framework: service charges are only payable to the extent costs are reasonably incurred and services of a reasonable standard (s.19); qualifying works (>£250 per tenant) and qualifying long-term agreements (>12 months) require s.20 statutory consultation — failure limits recovery to £250 per tenant unless the FTT dispenses; landlords must provide a summary of costs on request (s.21) and allow inspection of accounts (s.22); service charge demands must include the landlord's name and address (s.47 LTA 1987) and s.48 notice of address for proceedings. Reserve funds must be held in separate designated accounts (s.42 LTA 1987) on trust for tenants.

Right to Manage — CLRA 2002 and LRHUDA 2024 Reforms

RTM (CLRA 2002 Ch.1) allows leaseholders to take over block management without compensation or proving fault. Qualifying conditions: self-contained building; at least 2 flats; two-thirds qualifying leaseholders (lease >21 years). LRHUDA 2024 removed the prior 50% participation threshold and expanded qualifying premises. Procedure: form an RTM company; serve notice of invitation to participate (NIP) on non-members; serve claim notice on freeholder; freeholder has 1 month for counter-notice; acquisition date at least 3 months after claim notice. Post-RTM: RTM company takes over all management; freeholder retains the freehold and enforcement rights for certain obligations.

Building Safety Act 2022 — Higher-Risk Buildings

Higher-risk buildings (18m+ or 7+ storeys; 2+ residential units) require: registration with the Building Safety Regulator (BSR/HSE); appointment of an accountable person (typically the freeholder) and principal accountable person (PAP) where multiple APs; a building safety case report demonstrating how structural and fire safety risks are managed; a Building Assessment Certificate (BAC) on BSR request; resident engagement framework. Failure to register is a criminal offence. Cladding remediation costs significantly restricted from service charge recovery by LRHUDA 2024; freeholders must pursue developers via BSA 2022 remediation contribution orders.

Managing Agents — RICS Code and FCA Regulation

Managing agents must: belong to an approved property redress scheme (TPO or PRS) — criminal offence since 2014; belong to a government-approved CMP scheme if holding client money — required since 2019; comply with the RICS Code of Practice (mandatory for RICS firms: fee transparency; client money; service charge accounts; major works procurement). FCA Consumer Duty and Insurance Distribution Directive: where agents arrange buildings insurance and receive insurer commissions, fair value and disclosure requirements apply. LRHUDA 2024 requires freeholders and agents to account to leaseholders for any insurance commissions received.

Frequently asked questions

What are the main legal obligations in block management?+

Key obligations: (1) LTA 1985 service charge obligations — reasonable costs; s.20 consultation before qualifying works (>£250 per tenant); summary of costs on request; s.47/s.48 demand formality; (2) Building Safety Act 2022 for higher-risk buildings (registration; safety case; Building Assessment Certificate); (3) Right to Manage obligations under CLRA 2002 as amended by LRHUDA 2024; (4) managing agent regulation (property redress scheme; CMP; RICS Code; FCA Consumer Duty on insurance commissions).

What is the s.20 consultation requirement?+

Before qualifying works costing more than £250 per tenant, or entering into a qualifying long-term agreement (over 12 months), the landlord must consult leaseholders under LTA 1985 s.20 and the Service Charges (Consultation Requirements) Regulations 2003. Failure limits recovery to £250 per tenant for qualifying works unless the FTT dispenses with the requirement.

What is the right to manage?+

The right to manage (RTM) under CLRA 2002 Ch.1 (as amended by LRHUDA 2024) allows residential leaseholders in a qualifying block to take over management from the freeholder without paying compensation and without proving fault. Leaseholders form an RTM company, serve a claim notice, and acquire management on the acquisition date (at least 3 months after the notice). LRHUDA 2024 removed the 50% participation threshold.

Does the Building Safety Act 2022 apply to all residential blocks?+

The BSA 2022 higher-risk building regime applies to residential buildings of 18 metres or more (or 7+ storeys) with at least 2 residential units. The freeholder (accountable person) must register with the Building Safety Regulator (HSE), maintain a building safety case report, and apply for a Building Assessment Certificate.

Found a gap or disagree with something?

Reply to any LetSafe email or write to Richard@letsafeuk.co.uk. We rewrite guides when we get something wrong, the sooner we hear, the sooner we fix it.

Related landlord guides

Hand-picked by topic overlap with this guide.

Building Safety
Leaseholder Building Safety Protections UK — BSA 2022 Schedule 8 and Remediation Costs
The Building Safety Act 2022 leaseholder protections — qualifying leaseholders, relevant buildings (11m/5-storey threshold), Schedule 8 cost allocation (cladding vs non-cladding), the £2m landlord net worth test, service charge caps, and developer liability.
Leasehold Property
Shared Ownership UK — Lease Structure, Staircasing, SDLT, and Building Safety
Explains the shared ownership lease, staircasing to 100%, SDLT market value election vs staged approach, the LFRRA 2024 statutory lease extension right, and BSA 2022 protections extended to shared owners from 5 July 2023.
PBSA: HA 2004 s.254(2)(e) HMO Licensing Exemption for University-Managed Student Accommodation — Private PBSA Operators May Qualify Under University Nomination Agreement — Use Class C2 (Residential Institution) or Sui Generis — BCSW Code Accreditation — Building Safety Act 2021 for 18m+ Buildings
Purpose-Built Student Accommodation UK 2026 — PBSA HMO Licensing Exemption, Planning and BCSW Management Codes
PBSA landlord guide 2026: HA 2004 s.254(2)(e) exempts university-managed PBSA from mandatory HMO licensing; private PBSA operators qualify if all occupants are university students under a nomination agreement. Planning: typically Use Class C2 (residential institution) or sui generis — not C3/C4; no permitted development to C3. BCSW Code (British Council for Student Wellbeing; formerly ANUK/Unipol): voluntary accreditation widely required by universities before entering nomination agreements; covers maintenance, complaints, fire safety, fair contracts. Building Safety Act 2021: 18m+/7+ storey PBSA is a higher-risk building — Safety Case Report; Residents' Engagement Strategy; PAP obligations. Scotland: Civic Government (Scotland) Act 1982 HMO regime; educational establishment exemption. NI: HMO Act (NI) 2016. Wales: RHWA 2016.
RMC: Company Managing Leasehold Block — May Hold Freehold or Manage Under Contract — Directors Have Full CA 2006 Duties — Companies Act Filings: CS01; Accounts; PSC; Directors Within 14 Days — LTA 1985 Service Charge: Reasonable; Section 20 Consultation Above £250/Leaseholder; Separate Trust Accounts — LTA 1987 Right of First Refusal on Freehold Sale — RTM vs RMC: RTM Is Statutory (CLRA 2002); RMC Is Contractual
Residential Management Company UK 2026 — RMC Director Duties, Service Charge Governance and RTM vs RMC
Residential Management Company guide 2026: RMC manages leasehold block (common parts; service charge; contractors); may hold freehold. Directors' CA 2006 duties: act within powers; promote success (s.172); independent judgment; reasonable care; avoid conflicts (s.175); no third-party benefits; declare interests (s.177/182). Companies Act compliance: annual confirmation statement (CS01; £34); annual accounts; PSC register; director changes within 14 days. Service charge LTA 1985: reasonable; Section 20 consultation (qualifying works over £250/leaseholder); separate trust accounts (s.42); prescribed demand form (s.21 summary). RTM vs RMC: RTM statutory right under CLRA 2002 (no freehold purchase required; freeholder retains freehold); RMC is private/contractual. LTA 1987 right of first refusal: criminal offence to sell freehold without first offering to qualifying tenants. D&O insurance. ARMA/RICS managing agents. Leasehold and Freehold Reform Act 2024.
England and Wales · Leasehold Management Pack (LPE1 Form — Law Society Standard July 2019): Required When Selling a Leasehold Flat · Contents: Service Charge Accounts; Major Works / Section 20 Notices; Buildings Insurance; Ground Rent; Reserve Fund; Disputes; Breach of Covenant · Timeframe: 4-10 Days (Often 4-6 Weeks — Most Common Cause of Delayed Leasehold Flat Sales) · Cost: £200-£600 · LAFRA 2024: 28-Day Maximum Response (s.35); Fee Cap; Right to Request Directly From Freeholder
Leasehold Management Pack UK 2026 — LPE1 Form, What It Contains, Timeframes, Fees, LAFRA 2024 Changes and Implications for Landlords Selling Flats
Leasehold management pack UK 2026: required when selling a leasehold flat; completed by the freeholder or managing agent on the LPE1 (Leasehold Property Enquiries) form (Law Society standard — July 2019 version). Contents: service charge accounts (2-3 years certified); current year service charge budget (itemised); planned major works and outstanding Section 20 consultation notices; buildings insurance details; ground rent (amount; review dates; LRGRA 2022 peppercorn for new leases from 30 June 2022); reserve fund balance; ongoing disputes or tribunal proceedings; breach of covenant details. Timeframe: typically 4-10 working days (poorly managed freeholders can take 4-6 weeks — one of the most common causes of delayed leasehold flat conveyancing). Cost: typically £200-£600 set by freeholder or managing agent. Leasehold and Freehold Reform Act 2024 (LAFRA 2024): 28-day maximum response time (s.35); fee cap provisions; right to request pack directly from freeholder; compensation for inaccurate information.
Leasehold Reserve Fund — LTA 1985 and LTA 1987
Leasehold Reserve Fund (Sinking Fund) — LTA 1985 s.18-22, LTA 1987 s.42 Trust Status, FTT Challenge and RICS 2019 Statement
A leasehold reserve fund (sinking fund or major works fund) holds capital contributions on trust for leaseholders (LTA 1987 s.42) to meet the cost of major periodic works — roof replacement; external redecoration; lift maintenance; communal heating. Reserve fund contributions are 'service charges' within LTA 1985 s.18 and are subject to: (1) LTA 1985 s.19 (reasonableness — only payable if reasonably incurred and of a reasonable standard); (2) LTA 1985 s.20 (major works consultation — £250/tenant threshold; Stage 1/2/3 procedure; failure limits recovery to £250/tenant without FTT dispensation under s.20ZA); (3) LTA 1985 s.21 (summary of relevant costs — within 1 month); (4) LTA 1985 s.22 (inspection of accounts — 21 days; criminal penalty £2,500 for refusal); (5) LTA 1987 s.42 (trust status — designated separate trust bank account; protected in managing agent insolvency; interest belongs to the trust); (6) FTT challenge (LTA 1985 s.27A — before or after paying; no cost risk); (7) RICS Professional Statement on Service Charges in Residential Management (2019): separate trust account; RFAR every 5 years (25-year planned maintenance schedule); accountant certification >£150,000 income; Reserve Fund Adequacy Report (RFAR) recommended by appropriately qualified surveyor.