Right to Manage (RTM) Cost Calculator — Leasehold Management Takeover

RTM is a statutory right for leaseholders in qualifying residential buildings to take over the management of their building from the freeholder or managing agent, without having to buy the freehold or prove management failure. It was introduced by the Commonhold and Leasehold Reform Act 2002. The right is exercised through forming an RTM company.

Qualifying conditions: at least 2 flats in the building, the building must be mostly residential (non-residential space under 25% of floor area), qualifying leaseholders with leases over 21 years must hold at least 2/3 of flats, and at least 50% of all qualifying flats must join the RTM company. No minimum number of flats is required.

No. RTM is a no-fault right — you don't need to prove that the freeholder or their managing agent is doing a poor job. The right exists regardless of the quality of management. This distinguishes RTM from other remedies like appointment of a manager by the Tribunal, which requires evidence of mismanagement.

RTM gives leaseholders the right to: manage the building's day-to-day affairs, appoint their own managing agent (or self-manage), control service charge spending, choose contractors, manage major works, and handle insurance arrangements. Ground rent collection and certain landlord functions remain with the freeholder.

The RTM company is formed as a private company limited by guarantee, typically using a standard Companies House template. Each qualifying leaseholder in the building can be a member. Directors are elected by the members. The company must meet certain requirements set out in the Commonhold and Leasehold Reform Act 2002.

A formal claim notice must be served on the freeholder at least 14 days after notices of invitation have been sent to all qualifying leaseholders. The freeholder can respond with a counter notice if they claim the building doesn't qualify. If no counter notice within the time limit, RTM is acquired automatically.

The freeholder can serve a counter notice claiming RTM doesn't apply (e.g., building doesn't qualify, company not properly formed). If disputed, the matter goes to the First-tier Tribunal. The freeholder cannot simply refuse RTM on other grounds if the requirements are met. Freeholders historically tried to challenge on technical grounds.

No. RTM does not change the ground rent provisions in the leases. The freeholder still collects ground rent. RTM only affects management functions. If the ground rent is onerous, a separate lease extension application would be needed to reduce or eliminate the ground rent.

The RTM company takes over responsibility for major works (Section 20 consultation). They must consult leaseholders about works exceeding £250 per flat per year. Proper compliance with consultation requirements is essential — failure can leave the RTM company unable to recover costs from leaseholders.

Yes. RTM can be lost if the RTM company ceases to be a validly constituted RTM company, or if the Tribunal finds grounds to end the RTM. Practically, if the RTM company fails to manage properly or becomes insolvent, management may revert to the freeholder. Good governance of the RTM company is essential.

The Leasehold and Freehold Reform Act 2024 changed the RTM cost rules: freeholders can no longer routinely recover their legal and professional costs from leaseholders in most circumstances. This significantly reduces the financial risk of pursuing RTM, as previously freeholder costs could be significant barriers.

RTM gives control — if the current management is satisfactory, the benefit is mainly about being in control of decisions and having transparency over spending. Even with a good managing agent, RTM can be worthwhile to ensure the agent works for you (the leaseholders) rather than the freeholder, and to have direct oversight of the service charge.