Forming a Right to Manage company: A New Era for Leaseholders

davidmetcalfe3
Oct 1
3 min read

For leaseholders, the way their building is managed can make a big difference to both their finances and quality of life. Service charges, maintenance standards, and communication with the landlord or managing agent all shape the day-to-day experience of living in a leasehold property.

For those who want more control, the law provides an important route: the Right to Manage (RTM). Thanks to reforms that came into force in March 2025, this process is now more accessible than ever.

What is the Right to Manage?

The Right to Manage, introduced under the Commonhold and Leasehold Reform Act 2002, allows leaseholders of flats to take over the management of their building from the landlord or existing agent. Crucially, leaseholders do not have to prove mismanagement or wrongdoing, it is a legal right.

By forming an RTM company, leaseholders can assume responsibility for decisions about service charges, repairs, maintenance, and the appointment of managing agents.

What Has Changed in 2025?

The Leasehold and Freehold Reform Act 2024, effective from 3 March 2025, brought several key updates to make RTM more accessible and fair:

Non-residential threshold raised to 50%: Previously, if more than 25% of a building’s floor area (excluding common parts) was used for commercial purposes, leaseholders were blocked from claiming RTM. Now, leaseholders can qualify even where up to 50% of the building is non-residential, opening the door for many mixed-use developments.
Landlord costs limited: Under the old rules, leaseholders had to pay the landlord’s “reasonable” costs in responding to an RTM claim. This deterred many from exercising their rights. The new law largely removes this obligation: each party generally covers their own legal expenses.
Leaseholder control strengthened: To prevent landlords dominating decision-making within RTM companies, the law now limits landlord voting rights to a maximum of one-third of the total votes held by leaseholders. This ensures residential leaseholders retain meaningful control.

Who is Eligible?

To exercise RTM, the following conditions must generally be met:

The building must contain at least two flats.
At least two-thirds of the flats must be held by “qualifying leaseholders” (those with leases originally granted for more than 21 years).
At least 50% of the leaseholders must participate in the RTM company.
No more than 50% of the floor area (excluding common parts) can be non-residential.

Why set up a Right to Manage company?

Leaseholders may benefit in several ways:

Transparency and fairer service charges: Budgets and spending are decided by leaseholders, ensuring money is allocated fairly.
Choice of managing agent: Leaseholders can appoint a professional agent who is responsive to their needs.
Improved maintenance and decision-making: Works can be prioritised based on the real needs of residents, not landlord convenience.
Community empowerment: RTM gives leaseholders a collective voice and more control over their homes.

Final Thoughts

The March 2025 reforms have made the Right to Manage a more practical and empowering option for leaseholders, particularly in mixed-use developments. While RTM brings new responsibilities, including compliance with health and safety, insurance, and legal obligations, it offers a clear route to greater transparency, accountability, and peace of mind.

At RDSE Property Management, we specialise in supporting Right to Manage companies, providing the professional expertise that allows leaseholders to enjoy the benefits of RTM without the stress of day-to-day management.

👉 If you and your fellow leaseholders are considering the Right to Manage, get in touch with RDSE Property Management today. Our team can guide you through the process and provide ongoing support tailored to your building’s needs.