Right to Manage (RTM) Leasehold UK 2026 — Landlord Guide

Qualifying criteria — does your building qualify for RTM?

Not every leasehold building qualifies for RTM. To exercise the right, all of the following conditions must be met:

• The building must be a self-contained building or a self-contained part of a building. Most purpose-built flat blocks qualify; split-level arrangements and managed estates may require careful analysis
• The building must contain at least two flats held by qualifying tenants. A qualifying tenant is a leaseholder under a long lease (originally granted for more than 21 years) who is not a commercial tenant or the freeholder
• At least two-thirds of the total number of flats in the building must be held by qualifying tenants. If a freeholder owns more than one-third of the flats in the block (e.g. as unsold new-build units), RTM may be unavailable
• Not more than 25% of the internal floor area of the building may be in non-residential use (e.g. commercial units on the ground floor). If the building has substantial commercial space, it may fall outside the RTM regime
• The building must not be within the Crown Estate or the Duchies of Cornwall or Lancaster, and must not be on a National Trust estate
• There is no minimum number of years remaining on the lease for RTM qualification — even a leaseholder with a short lease can participate in an RTM, though this would be unusual in practice

The 50% participation threshold

Even if the building qualifies, the RTM claim can only proceed if a sufficient proportion of qualifying tenants join the RTM company. The statutory requirement is:

• At least half of the total number of flats in the building must be owned by members of the RTM company at the date the claim notice is served. This is expressed as a fraction of all flats in the building, not just the flats held by qualifying tenants
• Example: in a 10-flat block where all flats are held on long leases, you need at least 5 leaseholders to join the RTM company as members before serving the claim notice
• Example: in a 10-flat block where 2 flats are owned by the freeholder and 8 by leaseholders, you still need 5 RTM company members (half of 10) — meaning 5 of the 8 leaseholders must participate
• Flat owners who let their flat out (buy-to-let landlords) count as qualifying tenants and can be RTM company members — the flat does not need to be owner-occupied
• The 50% threshold must be maintained from the date of serving the claim notice through to the RTM acquisition date. If members resign from the RTM company during this period, the claim may fail
• Tenants of the flat (i.e. the people renting from the landlord-leaseholder) are not qualifying tenants for RTM purposes and cannot be RTM company members

Setting up the RTM company

The RTM company must be incorporated at Companies House before the claim notice is served. It must be a private company limited by guarantee and must have a memorandum and articles of association that comply with the statutory model (prescribed in the RTM Companies (Memorandum and Articles of Association) (England) Regulations 2003):

• The company name must end in 'RTM Company Limited' or 'RTM Company Ltd'
• The memorandum must state that the object of the company is to exercise and facilitate the exercise of the right to manage the specified building
• Membership of the RTM company is open to all qualifying tenants of the building — each qualifying tenant is entitled to become a member, whether or not they supported the RTM claim
• The freeholder is also entitled to become a member of the RTM company after the RTM acquisition date, with limited voting rights on matters directly affecting the freehold
• The RTM company must appoint at least one director from among the leaseholder members. A professional managing agent can be appointed by the RTM company to carry out day-to-day management on its behalf
• Costs of incorporating the RTM company and the initial stages of the claim are borne by the leaseholders — there is no cost-shifting mechanism until after a counter-notice dispute

The claim notice process — step by step

The RTM claim is initiated by serving a claim notice on the freeholder, any managing agent, and any third parties with management responsibilities. The process is strictly statutory:

• Step 1: Incorporate the RTM company at Companies House. Ensure the articles comply with the 2003 Regulations. Obtain the certificate of incorporation before proceeding
• Step 2: Invite all qualifying tenants of the building to join the RTM company. At least 50% of all flats (not just qualifying tenants) must be members before serving the claim notice
• Step 3: Serve the statutory claim notice on the freeholder (and any other landlord with management rights, managing agent, and third-party contractors who have management obligations). The claim notice must contain: the name and registered address of the RTM company, the address of the building, a statement that the company is entitled to acquire the right to manage, a list of qualifying tenants who are members, and a date (at least one month in the future) for the acquisition of RTM
• Step 4: The freeholder has one month to serve a counter-notice. A counter-notice may accept the claim (in which case RTM proceeds) or dispute it (alleging the building or participation threshold does not qualify). If the freeholder does not respond within one month, the RTM company can apply to the FTT to acquire the right
• Step 5: If a counter-notice is served disputing the claim, either party can apply to the FTT. The FTT determines the dispute. If it decides in favour of the RTM company, the management transfer proceeds
• Step 6: On the RTM acquisition date, the RTM company acquires management responsibilities. All service charge monies held by the outgoing manager must be transferred to the RTM company within 28 days. Existing management contracts binding on the landlord continue to bind the RTM company during the contract term unless terminated by agreement

What changes after RTM — service charges and management

After RTM acquisition, the RTM company takes over all management functions. Key practical changes:

• The RTM company collects service charges from all leaseholders, including those who did not join the RTM company — every qualifying tenant must pay service charges to the RTM company after acquisition
• The RTM company must carry out the same obligations as the outgoing freeholder under each lease — it cannot reduce services below what the lease requires, but it can change contractors and managing agents
• Section 20 consultation obligations transfer to the RTM company — before any major works exceeding £250 per leaseholder, the RTM company must follow the same statutory consultation process as a freeholder would
• The RTM company can appoint a professional managing agent to handle day-to-day work, collect charges, and manage contractors — many RTM companies do this to avoid placing the administrative burden entirely on volunteer leaseholder directors
• The freeholder retains the freehold title. RTM does not transfer ownership of the freehold or affect ground rent obligations under existing leases. The freeholder remains entitled to pursue forfeiture for breach of lease covenants
• RTM can be brought to an end by a court or tribunal order where the RTM company is mismanaging the building. Leaseholders should ensure the company is properly governed and that accounts are filed at Companies House on time

Frequently asked questions