Right to Manage just got cheaper: the 3 March 2025 reforms explained

The Right to Manage has always been one of the more well-designed parts of English leasehold law. It is a no-fault statutory right — meaning leaseholders do not have to prove negligence, poor management, or any wrongdoing at all. If the building qualifies and enough residents want to act, they can form a company and take over.

In practice, though, two features of the original framework regularly deterred leaseholders from using it. One was a costs rule that meant the RTM company could end up paying the freeholder's legal and surveyor fees even on a clean, uncontested claim. The other was the 25% non-residential floor-space limit, which locked out large numbers of mixed-use blocks.

On 3 March 2025, three changes to the Right to Manage regime came into force under the Leasehold & Freehold Reform Act 2024. They address both of those problems and add a third improvement on voting rights. Together they represent the most significant practical upgrade to RTM since the right was introduced in 2002.

Change 1: the non-residential limit rises from 25% to 50%

The original Commonhold and Leasehold Reform Act 2002 allowed RTM only where the non-residential floor space in a building was no more than 25% of the total. The rationale was that commercial premises had different management needs and that a residential RTM company might not be the right vehicle to handle them.

The practical consequence, however, was that many mixed-use blocks — particularly in town centres, high streets, and urban neighbourhoods where flats routinely sit above shops, restaurants, and offices — fell outside the right entirely. A block with a ground floor of four retail units and three floors of flats might easily have had non-residential space exceeding a quarter of the total, and its residents had no RTM route available.

The new limit is 50%. A building now qualifies for RTM provided non-residential floor space does not exceed half of the building's total internal floor area. This change will bring a substantial number of previously excluded blocks into eligibility.

For leaseholders in mixed-use buildings who have looked at RTM before and been told they do not qualify, it is worth reassessing. If your building has flats above commercial premises, measure the floor space carefully — either yourself from the plans or with a surveyor's help — to see whether the ratio now falls within the revised limit.

It is worth noting that the RTM company, once formed, takes over management functions for the whole building, not just the residential parts. That includes insurance, maintenance of shared structure and common areas, and any services that benefit both residential and commercial occupants. Managing a building with commercial tenants adds complexity, and it is wise to think through the practicalities — and potentially take specialist advice — before proceeding.

Change 2: RTM companies no longer pay the freeholder's process costs in non-contentious claims

This was, for many leaseholders, the single biggest deterrent to RTM. Under the original legislation, if leaseholders served a claim notice and the freeholder did not dispute it — meaning the claim proceeded smoothly — the RTM company was still typically liable for the freeholder's reasonable legal and surveyor costs in processing the claim. On a straightforward claim in a modest block, those costs might run to several hundred or a few thousand pounds. On a larger or more complex building, they could be significantly higher.

The effect was a tax on success. Leaseholders who did everything right, met every eligibility test, served every notice correctly, and encountered no challenge from the freeholder still had to fund the other side's professional advisers. For many smaller blocks where the per-flat cost would be disproportionate, this made RTM uneconomic to pursue.

The Leasehold & Freehold Reform Act 2024 inserts new sections 87A and 87B into the Commonhold and Leasehold Reform Act 2002. These provide that, in a non-contentious RTM claim, the RTM company is no longer liable for the landlord's process costs.

A non-contentious claim is one where the freeholder does not dispute the right. It is the majority of RTM claims. Where the claim runs its full course without a challenge — which, absent any genuine eligibility issue, is typically the outcome — each side now bears its own costs.

What the tribunal can still do

This is not a blanket immunity from costs. The First-tier Tribunal (Property Chamber) retains the power to order costs in two situations:

1. Where the claim is withdrawn or deemed withdrawn. If an RTM company serves a claim notice and then abandons the claim — or the claim lapses because the required threshold of participating tenants is not maintained — costs can still be awarded. This is a reasonable safeguard against speculative or cavalier claims.

2. Where the RTM company has acted unreasonably. The tribunal has a general power to award costs against a party that has behaved unreasonably in the conduct of the proceedings. This too is a proportionate limitation — it discourages bad faith without penalising genuine claimants.

Outside those situations, a clean non-contentious claim is now effectively cost-neutral for the RTM company in terms of the freeholder's fees. The RTM company's own professional costs — its solicitor, any surveyor — remain its own to bear, as they always have been.

For blocks where the costs deterrent was the main barrier, this change makes RTM meaningfully more accessible.

Change 3: landlord votes capped at one-third

When an RTM company is formed using the prescribed model articles, all qualifying tenants in the building become entitled to be members. Landlords — including the freeholder and any intermediate leaseholder — also become members of the RTM company after acquisition. The model articles govern how members vote on company matters.

Under the original framework, landlord members could, in principle, exercise votes that gave them substantial influence over the RTM company's decisions, even though the whole point of RTM is to give leaseholders control.

The RTM Company (Model Articles) (England) (Amendment) Regulations 2025 — also in force from 3 March 2025 — cap the votes exercisable by landlords at no more than one-third of the votes exercisable by qualifying tenants. This is not exclusion: landlords remain members and retain a voice. But the cap ensures that leaseholders always command at least three-quarters of the effective voting power, regardless of how the landlord's interests are structured.

In practice, most RTM companies are leaseholder-run from the outset and the landlord's membership is nominal. But in blocks where the freeholder or an intermediate landlord holds a significant number of flats on long leases — and therefore has membership rights in the RTM company as a qualifying tenant — this cap provides a meaningful structural protection.

What has not changed

These three reforms are significant, but they do not alter the core RTM process. The fundamental sequence — forming the company, inviting participation, serving the claim notice, waiting for the counter-notice, taking over on the acquisition date — remains exactly as it was under the Commonhold and Leasehold Reform Act 2002.

The eligibility tests (other than the non-residential floor-space limit) are also unchanged:

• The building must be self-contained.
• It must contain two or more flats held by qualifying tenants.
• At least two-thirds of the flats must be held by qualifying tenants.
• Qualifying tenants are those holding leases originally granted for more than 21 years.
• Houses do not qualify.
• Participation: the RTM company must have qualifying tenants from at least 50% of the flats as members before the claim notice is served.

The right also remains what it has always been: a right to take over management, not ownership. The freeholder keeps the freehold. The RTM company does not acquire any interest in the building's title — it takes on responsibility for the management functions under the leases, including service charges, maintenance, insurance, and statutory compliance. Service charge contributions continue to be held on trust for leaseholders in the block's own designated account.

The broader context

These RTM reforms came into force on the same day as something else significant: the government published the Commonhold White Paper, setting out plans to make commonhold the default tenure for new flats and to ban new leasehold flats. A draft Commonhold and Leasehold Reform Bill followed on 27 January 2026 and is currently undergoing pre-legislative scrutiny.

Commonhold and RTM are complementary responses to the same underlying problem: that leasehold flat owners have historically had too little control over how their homes are managed and too little security in their tenure. RTM is the immediate, available right; commonhold is the longer-term structural alternative. For blocks that want to act now rather than waiting for the legislative horizon to clarify, RTM — especially with the cost barrier substantially reduced — has never been a more viable route.

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FAQ

My block is above a row of shops. We were told years ago we didn't qualify for RTM. Does the 50% limit change that for us?

It might. The previous 25% limit excluded many mixed-use blocks. If your non-residential floor space is between 25% and 50% of the total, you should reassess eligibility. Get a floor-space measurement if you are not sure of the ratio, and then take advice on whether you now qualify.

If the freeholder doesn't fight our claim, do we really pay nothing towards their side's costs now?

Under the new ss.87A/87B of the CLRA 2002, the RTM company is not liable for the landlord's process costs in a non-contentious claim. You will still need to fund your own solicitor and any surveyor you use. But the freeholder's professional fees are now theirs to bear.

Can the freeholder manufacture a dispute just to trigger costs?

A freeholder can only serve a counter-notice on prescribed grounds — for example, that the building does not qualify. If there are no genuine grounds to dispute the claim, a counter-notice that invents a ground would likely fail at tribunal, and the conduct could engage the tribunal's general costs discretion against the landlord. Taking advice on the strength of your eligibility position before serving the claim notice is the best safeguard.

Does the one-third voting cap apply immediately to existing RTM companies?

The Amendment Regulations apply to the model articles going forward and to RTM companies that adopt the revised model articles. If your RTM company was incorporated before 3 March 2025 using the old model articles, you may wish to take advice on whether an update to your articles is appropriate.

What does RTM actually cover once we take over?

The RTM company becomes responsible for the management functions specified in the leases: service charges, repairs and maintenance of common parts, buildings insurance, compliance with health and safety obligations, and statutory consultation requirements (including Section 20 for major works). Service charge contributions sit in the block's own trust account — the money belongs to the leaseholders and is never held by any third-party manager on their behalf.