Right to manage review

A changing landscape

The right to manage (RTM) remains one of the most significant rights available to residential leaseholders and continues to evolve through legislation and case law. Against a backdrop of wider leasehold reform and complex Building Safety Act issues, the RTM regime is attracting renewed attention from landlords, investors, managing agents and legal advisers.

Introduced by the Commonhold and Leasehold Reform Act 2002, RTM enables qualifying leaseholders to take control of the management of their building without purchasing the freehold and without having to prove fault on the part of the landlord. By establishing an RTM company, leaseholders can assume responsibility for key management functions, including repairs, maintenance, insurance and service delivery.

Reform is gathering pace

More than two decades after RTM was introduced, the legal framework is undergoing substantial change. The Leasehold and Freehold Reform Act 2024 (LARFA 2024) has implemented several recommendations arising from the Law Commission’s review of the regime, with the aim of making RTM more accessible and practical for leaseholders.

Among the most notable reforms are changes to eligibility rules for mixed-use buildings, with the commercial space threshold increasing from 25% to 50%. Other measures seek to limit landlords’ ability to recover certain costs associated with RTM claims and introduce changes to voting arrangements within RTM companies.

These reforms have the potential to broaden access to RTM and could result in more buildings becoming eligible for resident-led management arrangements. For landlords and property owners, they also raise important questions about costs, management responsibilities and the future operation of residential assets.

Landmark cases

Alongside legislative reform, recent court decisions have provided important guidance on how RTM should operate in practice.

One of the most significant judgments is The Courtyard RTM Co Ltd v Rockwell, in which the Court of Appeal considered whether residential blocks connected by shared facilities could exercise RTM independently of a wider estate. The case examined the meaning of concepts such as “vertical division” and a “self-contained part of a building” – issues that extend beyond RTM and have implications for related areas of property law.

The Supreme Court has also weighed in on the RTM regime through its decision in Avon Freeholds Limited v Cresta Court E RTM Company Ltd. The case focused on whether procedural defects automatically invalidate an RTM claim. The judgment provides useful guidance on how courts may approach technical errors where no material prejudice has been caused.

What happens next?

Although significant reforms are already underway, the RTM landscape is far from settled. Some provisions within LAFRA 2024 have yet to come into force, while the government continues to consider broader leasehold changes through proposals for commonhold reform.

As new legislation is implemented and further cases reach the courts, we can expect continued clarification of how RTM rights should operate in increasingly complex residential developments.

For advisers working with landlords, leaseholders, investors and managing agents, staying on top of these developments will be essential as the balance of control within residential property management continues to evolve.

Why read on?

The full article provides a detailed analysis of the latest RTM reforms and explains precisely how LAFRA 2024 will affect property owners, investors, managing agents and leaseholders. It examines the practical and commercial consequences of the new rules, explores the provisions that are still awaiting implementation and highlights areas where uncertainty remains.

Readers will also gain an in-depth understanding of two of the most important recent RTM cases, including the Court of Appeal’s decision in The Courtyard RTM Co Ltd v Rockwell and the Supreme Court’s ruling in Cresta Court, together with expert commentary on what these judgments mean in practice. For those advising clients in this area, the article offers valuable insight into the opportunities, risks and future direction of one of the fastest-moving areas of residential property law.

This is a shortened version of a full-length article previously featured in Property in Practice magazine. To read the full article, log in or register, using the links below.