Right to Manage: What Changes After Leaseholders Take Control?

From Frustrated Leaseholder to Company Director

One day you are questioning a service-charge demand. The next, you are a director of the company responsible for issuing it.

That is the reality of Right to Manage: leaseholders gain greater control over how their building is maintained, how money is spent and which managing agent is appointed. But they also inherit the decisions, paperwork and accountability that come with running a residential building.

Taking control can be a major improvement—but only when the RTM directors understand exactly what they have taken responsibility for.

What is Right to Manage?

Right to Manage allows qualifying leaseholders to take over certain management functions from the freeholder without purchasing the freehold. Leaseholders do not normally need to prove that the freeholder or existing managing agent has managed the building badly.

Following reforms introduced in March 2025, buildings can qualify where up to 50% of the internal floor space is used for non-residential purposes. In most circumstances, leaseholders are also no longer required to pay the freeholder’s legal costs when making an RTM claim.

There are still important qualification requirements. The property must contain flats, at least two-thirds must be held on qualifying long leases, and at least half of the flats must be represented by members of the RTM company before management can be acquired.

What Changes Once the RTM Company Takes Control?

On the acquisition date, responsibility for many of the building’s day-to-day management functions transfers to the RTM company.

This can include:

• Collecting and managing service charges

• Maintaining communal hallways, stairs and external areas

• Organising repairs to the structure and roof

• Arranging cleaning, gardening and other regular services

• Managing contractors

• Dealing with building-related complaints

• Administering reserve or sinking funds

• Consulting leaseholders about qualifying major works

• Monitoring insurance, fire safety and other compliance requirements

The freeholder continues to own the building, but the RTM company becomes responsible for managing many of the services and obligations contained in the leases.

The Responsibilities of RTM Directors

RTM directors are not simply representatives who occasionally vote on repairs. They are directors of a limited company and take on legal and administrative responsibilities.

The company must maintain proper records, submit annual accounts and confirmation statements, and notify Companies House when directors or other registered details change.

Directors should also ensure that:

• Decisions are made collectively and properly recorded

• Service-charge money is protected and accounted for

• Expenditure is authorised under the leases

• Contractors are suitably qualified and insured

• Maintenance and compliance issues are not ignored

• Conflicts of interest are declared

• Leaseholders receive appropriate financial information

• Personal information is handled in accordance with UK GDPR

• Major-works consultation requirements are followed

Directors do not have unlimited freedom to spend service-charge money however they choose. The leases remain the starting point. They determine what services can be provided, which costs may be recovered and how each leaseholder’s contribution is calculated.

How Should Decisions Be Made?

A well-run RTM company needs a clear decision-making structure.

Routine operational matters can usually be delegated to the appointed managing agent. Significant decisions—such as major expenditure, changes of contractor, legal proceedings or long-term maintenance plans—should be considered and approved by the directors.

Good practice includes:

• Holding properly recorded directors’ meetings

• Keeping written minutes and decision logs

• Obtaining competitive quotations

• Reviewing budgets and expenditure regularly

• Separating urgent repairs from planned improvements

• Communicating material decisions to leaseholders

• Avoiding important decisions through informal conversations alone

The objective should not be to choose the cheapest option every time. Directors must consider value, competence, safety, the terms of the leases and the long-term interests of the building.

Appointing a Professional Managing Agent

An RTM company may manage the building itself or appoint a professional managing agent.

Self-management can appear cheaper, but directors must be realistic about the workload. Collecting service charges, pursuing arrears, managing contractors, arranging statutory inspections, handling emergencies and maintaining proper accounts require time and experience.

A professional managing agent can undertake the day-to-day work while the RTM directors retain strategic control.

Before making an appointment, directors should examine:

• Professional qualifications and industry membership

• Client Money Protection arrangements

• Professional indemnity insurance

• Experience managing similar blocks

• Emergency-reporting procedures

• Financial reporting and arrears recovery

• Contractor-selection processes

• Online access to accounts and compliance documents

• Management fees and additional charges

• Termination provisions in the management contract

The managing agent should receive a clear written appointment setting out its authority, duties, reporting obligations and financial limits.

What Does Not Change After RTM?

Right to Manage does not transfer ownership of the freehold to the leaseholders. It also does not rewrite the leases or remove the freeholder completely.

The freeholder may retain certain rights and must be notified before the RTM company grants some lease approvals. Advance notice may be required for matters such as assignments, subletting, structural alterations and changes of use.

Leaseholders also retain their individual obligations. They must continue paying valid service charges, complying with their leases and obtaining any necessary consents.

Control Must Be Matched by Responsibility

Right to Manage can transform a poorly run block. It can give leaseholders greater transparency, better control over expenditure and a stronger voice in decisions affecting their homes.

But the RTM company must then do the job properly.

The strongest RTM arrangements combine active and accountable directors with a competent managing agent, clear financial reporting and open communication with leaseholders.

MyEstate Luton assists leaseholders and RTM companies with block-management takeovers, budgeting, compliance, contractor management, service-charge administration and long-term maintenance planning.

If leaseholders in your building are considering Right to Manage—or have already acquired management but need professional support—contact MyEstate for an honest discussion.

MyEstate Luton
Sales • Lettings • Property Management • Block Management • Land & Development
Telephone: 01582 380330
Email: luton@my-estate.co.uk
Website: www.my-estate.co.uk

This article provides general information and does not constitute legal advice. RTM qualification and management responsibilities depend on the building, the leases and the applicable legislation. Obtain specialist advice where necessary.