What is Right to Manage and how do leaseholders use it?

Full answer

Right to Manage is a statutory right that allows leaseholders of flats in England and Wales to take over the day-to-day management of their building. Crucially, it is a no-fault right: you do not have to show the freeholder has done anything wrong, and you do not have to pay to buy the freehold. It is often a faster, cheaper route to control than collective enfreehisement (buying the freehold outright). To use RTM, the building and the leaseholders must meet qualifying conditions. Broadly, the building must contain flats held by qualifying long-leaseholders, the proportion of the floor area in non-residential use must be within the permitted limit, and a minimum proportion of the flats must take part. Leaseholders set up an RTM company (a private company limited by guarantee), which all participating leaseholders are entitled to join, and which must also invite the freeholder to become a member. The company then serves a formal claim notice on the freeholder. Once RTM takes effect, the RTM company assumes the management functions under the leases: setting and collecting service charges, arranging buildings insurance, organising repairs and maintenance, and dealing with managing agents. The freeholder keeps ownership of the freehold and continues to receive any ground rent, but loses control of management. Leaseholders still pay service charges - RTM does not make management free - but they decide how the money is spent and can change a poorly performing agent. Who it affects: typically leaseholders frustrated by high or opaque service charges, poor maintenance, or an unresponsive freeholder. It works best where neighbours can cooperate, since the RTM company is run by the leaseholders themselves. The process has strict procedural steps and notice requirements, and recent leasehold reform legislation has been changing the detailed qualifying rules, so check the current position on gov.uk or take specialist legal advice before serving notice. RTM is about control and ongoing service-charge costs rather than a one-off tax, so there is no specific tax calculator for it.