RTM claims were introduced in 2002 and give leaseholders the ability to take over the management of the building via an RTM company. However, in doing so, they do not acquire the freehold and there are strict criteria which apply before the right can be exercised. In addition, the procedure under the Commonhold and Leasehold Reform Act 2002 must be followed, and the leaseholders are liable to pay the freeholder’s costs. Often, it is preferable for the leaseholders to pursue a collective enfranchisement claim to purchase the freehold instead.
The forthcoming changes to RTM claims should, in theory, make it easier for leaseholders to exercise their RTM rights. This is because:
- The permitted non-residential element of the building is increasing from 25% to 50%, thus more buildings should qualify.
- The freeholder’s ability to recover their costs from leaseholders is being restrained such that there are limited circumstances in which they can claim their costs, and they cannot pass on non-litigation costs through the service charge to those non-participating leaseholders either – thus freeholders are perhaps less likely to challenge these types of claims.
- The Government has introduced the RTM Companies (Model Articles) (England) (Amendment) Regulations 2025 which make amendments to the “Model Articles of Association for RTM Companies” by capping the votes which can be exercised by landlords to 1/3 of the votes exercised by the qualifying tenants. This means that any votes which the landlord has will be diluted, thus limiting their influence on the claim even where they own several flats in the building.
- Any applications relating to defaults in the RTM procedure should now be made to the First Tier Property Tribunal and not the High Court or County Court in the first instance. The Tribunal is generally quicker than the Court and an application should only be made to the High Court if the Tribunal does not have jurisdiction.
Given the above, it remains to be seen whether there will now be an increase in RTM claims pending the Government’s introduction of the other, more controversial, changes being introduced by LAFRA 2024 to collective enfranchisement claims or whether leaseholders will just wait for those to be introduced. For more information on those changes please see our blog, “Residential Lease Extensions – where are we now?”
If you need help with landlord and tenant issues or have any questions about Right to Manage claims, please contact one of our Real Estate Dispute Resolution solicitors by email or call +44 (0)3333 231580.
