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Updated Right to Manage Process: What Leaseholders Need to Know from the Leasehold and Freehold Reform Act 2024
Effective from the 3rd of March 2025, significant updates to the Right to Manage (RTM) process have come into effect under the Leasehold and Freehold Reform Act 2024. In this article, Jennifer Eaton, assistant in our Property Litigation department, explains the RTM process and the impact of these recent legislative changes on leaseholders.
What is the Right to Manage (RTM) Process?
The Right to Manage (RTM) process empowers leaseholders in flats or developments to assume control over the management of their building from the freeholder or landlord. This statutory right gives leaseholders greater control over building management, ensuring their interests are represented by those who live in or have a direct stake in the property rather than by a landlord or management company with no day-to-day involvement.
Through the RTM process, leaseholders can manage common areas and services such as maintenance, insurance, and repairs. To do this, they form a Right to Manage company (an RTM company) made up of leaseholders with qualifying leases. The RTM company members then collectively make decisions about managing the building and can formally serve notice on the landlord to assume management responsibilities.
Right to Manage Process: Step-by-Step
- Eligibility: Leaseholders must meet specific criteria:
- Hold a registered lease of at least 21 years.
- At least two-thirds of the flats in the building must be held under long leases.
- These leaseholders must participate in the RTM claim.
- Formation of an RTM Company: Leaseholders form a company limited by guarantee, using prescribed articles confirming it is an RTM company. This company will take over management duties.
- Serving Notice: The RTM company serves a formal notice to the freeholder, stating its intention to acquire management rights. The notice must specify the building details, the names of participating leaseholders, and set deadlines for the freeholder’s response and the management transfer date.
- Dispute Resolution: If the freeholder contests the notice, disputes are referred to the First-tier Tribunal (Property Chamber) for determination.
- Management Transfer: If the RTM claim proceeds successfully, the RTM company assumes management responsibility for the building’s common areas, relieving the freeholder of these duties.
Key Changes Introduced by the Leasehold and Freehold Reform Act 2024
From the 3rd of March 2025, significant amendments to the RTM process have been introduced to simplify and expand leaseholders’ rights:
1. Increased Non-Residential Floor Space Threshold
Previously, buildings with over 25% non-residential floor space (such as shops or offices) were excluded from RTM claims. The new threshold raises this limit to 50%, allowing more mixed-use buildings to qualify for RTM.
2. Revised Cost Liability for RTM Claims
Leaseholders no longer automatically bear the freeholder’s legal costs for transferring management. Costs are only payable by leaseholders if specific conditions apply, such as unreasonable behaviour or withdrawal of the RTM claim. This change reduces financial risk for leaseholders initiating RTM claims.
3. Removal of the Two-Year Qualifying Period for Lease Extensions and Freehold Purchases
Leaseholders can now exercise rights to extend leases or purchase the freehold immediately after acquiring their property, with no requirement to own the lease for two years beforehand. This amendment increases flexibility and encourages quicker action by leaseholders.
These legislative reforms aim to make the Right to Manage process more accessible, affordable, and transparent for leaseholders. They address longstanding issues related to service charges, poor building maintenance, and landlord control, empowering leaseholders to take effective management of their homes.
Conclusion: Greater Leaseholder Control Through the Updated Right to Manage Process
The Right to Manage process is a valuable legal tool for leaseholders seeking control over their building management. These updates, introduced by the Leasehold and Freehold Reform Act 2024, expand eligibility, reduce financial burdens, and simplify procedures.
As these changes are implemented, leaseholders will enjoy stronger protections and enhanced rights, enabling them to manage their buildings more efficiently and safeguard their interests. If you are a leaseholder considering an RTM claim, understanding these reforms is essential for making informed decisions about your property’s management.
If you would like more detailed advice on the Right to Manage process or assistance with an RTM claim, contact Jennifer Eaton and our Property Litigation team on 023 8063 9311 or email enquiries@warnergoodman.co.uk.