1. What the right to manage is

The right to manage is a legal right, created by the Commonhold and Leasehold Reform Act 2002, for owners of leasehold flats to take over the running of their building. They do it through a right to manage company, often called an RTM company.

According to the Leasehold Advisory Service, you do not need the landlord's consent or a court order, and you do not need to show that anything has gone wrong. A well-run building can still change hands.

What changes is who manages the building, not who owns it. The freeholder keeps the freehold. If you want to own the building, that is a different process, covered in our guide to share of freehold.

2. Who qualifies

Under section 72 of the Act and the Leasehold Advisory Service's checklist, a building is eligible if:

• it is a self-contained building, or a self-contained part of one
• it contains at least 2 flats
• at least two-thirds of the flats are held by qualifying tenants, meaning leases of more than 21 years when first granted
• the landlord is not a local authority
• commercial space, such as a shop or office, takes up no more than 50% of the floor area, not counting common parts.

The 50% limit has applied since 3 March 2025, when the Leasehold and Freehold Reform Act 2024 raised it from 25%. Schedule 6 of the 2002 Act now carries the new figure.

2.1 Leaseholders who let their flats

Leaseholders do not have to live in the building. Owners who rent their flats out are still eligible.

2.2 The resident landlord exemption

A building is excluded if it is not purpose-built, has 4 flats or fewer, and the freeholder or an adult family member has lived in one of the flats as their only or main home for at least the last 12 months.

3. How the right to manage process works

3.1 Set up the RTM company

One or more leaseholders form and register a right to manage company. Some leaseholders will need to act as directors.

3.2 Invite every leaseholder to join

The company sends a notice inviting participation to every qualifying leaseholder who is not already a member. Leaseholders of at least half the flats must join. In a building with only 2 flats, both must.

3.3 Serve the claim notice

At least 14 days after the invitations, the company serves a claim notice on the freeholder, under section 79. The notice must give the freeholder at least one month to reply with a counter-notice.

3.4 Handle any counter-notice

If the freeholder disputes the claim, the company can apply to the tribunal for a decision.

3.5 Take over on the acquisition date

The claim notice sets the date the company takes over. Under section 80, it must be at least three months after the counter-notice deadline. Unspent service charges and any reserve fund then pass to the company.

Add those minimums together, 14 days, one month and three months, and the handover is at least four and a half months after the invitations go out. In practice it often takes longer.

4. What an RTM company does once it takes over

The company takes on the freeholder's management functions under the leases. That covers services, repairs, maintenance, improvements, insurance and management, including setting the service charge budget and collecting it.

It must follow the same rules the freeholder did. Major works still need section 20 consultation, and leaseholders keep their rights over service charge accounts.

4.1 What stays with the freeholder

The freeholder still owns the building, keeps the ground rent and keeps any right to forfeit a lease. It can also become a member of the RTM company once management has passed over.

4.2 Approvals under the lease

Where a lease needs the landlord's approval, the RTM company gives it instead. Under section 98, the company must give the freeholder 30 days' notice before approving an assignment, underletting, structural alterations or a change of use, and 14 days for anything else.

4.3 Using a managing agent

The company does not have to do the day-to-day work itself. It can appoint a managing agent and keep the directors' role to decisions and oversight.

5. What the right to manage costs

There is no premium and no compensation to pay the freeholder. The main costs are setting up the company and any professional help with the notices, which most leaseholders get from a solicitor or a specialist.

The freeholder's costs used to be a big part of the bill. Since 3 March 2025, the RTM company will not usually be liable for them, after the Leasehold and Freehold Reform Act 2024 removed the old cost-recovery rule.

Once the company is running, it has ongoing costs too: insurance for the directors, accounts and company filings, and any managing agent's fee.

6. Pros and cons of the right to manage

Why leaseholders do it

You choose the contractors and the managing agent, set the budget and decide what gets done. It is cheaper and quicker than buying the freehold, and you do not have to prove a case against the freeholder.

What it asks of you

Someone has to be a director, and the role is unpaid and can take real time. Directors must comply with company law, housing law and health and safety law, deal with arrears and disagreements, and keep the building in good condition.

The Leasehold Advisory Service warns against cutting services to save money. The company must act in the best interests of the building, even when that costs more.

When it is not the answer

The right to manage does not extend your lease, reduce your ground rent or give you the freehold. If those are the problems, look at the other routes in our guide to freeholder responsibilities.

7. The right to manage when you let your flat

If you let your flat, you can still join the RTM company, vote and stand as a director. Better management can keep the service charge in check, and that comes straight off your rental income.

Lease restrictions do not disappear when the RTM company takes over. A clause limiting the flat to use as a private residence still applies, and any approval the lease requires now comes from the company, with notice to the freeholder.

If your lease allows short lets, Houst offers Airbnb management across the UK, and the income calculator shows what your flat could earn before you commit.

This guide is general information, not legal or tax advice. Speak to a qualified adviser about your situation.