Can Leaseholders In A Block Set Up A Right To Manage Company?

The Right to Manage is a statutory right awarded to leaseholders under the Commonhold and Leasehold Reform Act 2002. The RTM allows leaseholders to take control over who manages their building.

What is the point of it?

Well, many tenants have been extremely unhappy about the standard of provision of services for their flats, and the cost.

RTM is intended to put control back in the hands of leaseholders. It provides for a statutory power which was long overdue and helps tenants deal with difficult and frivolous landlords. A driving up of standards of leasehold management usually follows.

It is really important that advice you receive is from an experienced lawyer who knows how to deal with the management of leasehold property.

6 basic steps you need to take to set up a right to manage company:

Step 1.

Call up a meeting of your fellow tenants and inform them of your proposed strategy.

Ensure that:

- at least 50% of the leaseholders will support you in writing.

- at least 2/3rds of the leaseholders have leases that were originally 21 years or longer.

- 25% of the floor area is in commercial, rather than residential use.

Step 2.

Consult your solicitor to support you with the right to manage company formation and registration at Companies House.

When the right to manage company is created each of the leaseholders can become members which does include the freeholder if needs be. Ask your lawyer about rules for determining how many voting rights the freeholder will be entitled to and other legal criteria.

Step 3.

Decide who is going to undertake the roles of Company Directors and Company Secretary and get them legally elected, in an open and transparent way.

There are certain statutory obligations upon these people so to make sure you talk with your lawyer to prevent you from running into financial problems.

Step 4.

Ensure the Directors invite any leaseholders who are not members of the right to manage company to join.

Step 5.

A Notice of Claim must be served on the freeholder in writing. The RTM solicitor needs to be involved here as it is critical this is done in compliance with legislation.

Step 6.

When the RTM lawyer has completed the legal formalities, the leaseholders can take over management of the block; they should diary in regular get-togethers in order to make sure records are kept updated.

In utilising your right to manage leasehold property - take further advice from a RTM solicitor before you begin moving forward.


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Bonallack & Bishop are lawyers specialising in forming a right to manage company. For advice on right to manage leasehold property, contact one of their solicitors today. Senior Partner Tim Bishop is responsible for all major strategic decisions at the firm, which he has grown by 1000% in 13 years.