What is an RTM Company and How Does It Work?

What is the Right to Manage?

The Right to Manage (RTM) is a legal right granted to leaseholders in England and Wales under the Commonhold and Leasehold Reform Act 2002. It allows qualifying leaseholders to take over the management of their residential building from the freeholder or their appointed managing agent — without needing to prove fault or pay compensation.

This is a significant right. Before 2002, leaseholders had very limited ability to challenge poor management. The RTM changed that by giving leaseholders a straightforward route to take control.

What is an RTM Company?

An RTM company is a private limited company incorporated specifically to exercise the Right to Manage. It must be set up before the RTM claim is made, and its membership is open to all qualifying leaseholders in the building.

Once the RTM is acquired, the RTM company becomes responsible for all management functions of the building — not the freeholder or their agent.

Who Qualifies?

To exercise the RTM, the building must meet certain criteria:

• It must be a self-contained building (or part of a building) containing at least two flats
• At least two-thirds of the flats must be held on long leases (over 21 years)
• No more than 25% of the internal floor area of the building can be in non-residential use

Leaseholders who qualify are those holding long leases of at least 21 years. At least 50% of the qualifying leaseholders must participate in the RTM claim (i.e., become members of the RTM company).

The RTM Process — Step by Step

Step 1: Incorporate the RTM company

The RTM company must be incorporated at Companies House. The company name must end in "RTM Company Limited" or "Right to Manage Company Limited".

Step 2: Invite participation

All qualifying leaseholders must be invited to become members. This is done by serving a notice of invitation to participate.

Step 3: Serve the Claim Notice

Once at least 50% of qualifying leaseholders are on board, a formal Claim Notice is served on the freeholder. This is a legally prescribed document.

Step 4: Counter-notice period

The freeholder has one month to serve a counter-notice if they believe the RTM criteria are not met. If no counter-notice is served, or if the claim succeeds at tribunal, the RTM is granted.

Step 5: Acquisition date

The RTM is acquired three months after the claim notice is served (or three months after a successful tribunal decision). From this date, the RTM company manages the building.

What Happens After RTM is Acquired?

Once the RTM is acquired, the RTM company takes on all management functions including:

• Collecting service charges
• Maintaining the building (structure, common parts, lifts, etc.)
• Arranging buildings insurance
• Managing contractors
• Holding the reserve fund
• Preparing year-end accounts

The freeholder retains ownership of the building and is still entitled to receive service charges for any obligations under the lease that relate to their interest (e.g., ground rent, if applicable).

RTM Company Structure

An RTM company must have:

• Directors — usually volunteer leaseholders who run the day-to-day management
• Members — all participating leaseholders are members of the company
• Companies House filings — annual confirmation statement and accounts must be filed

Most RTM companies are run by volunteers, with specialist software handling the administrative burden of service charge collection, accounting, and communications.

How PropLinker Helps RTM Companies

PropLinker was built with RTM companies in mind. The platform handles:

• Service charge billing and collection via GoCardless Direct Debit
• Arrears management with automated reminders and late fees
• Financial reporting — income/expenses, cash flow, and year-end accounts
• Multi-building management for RTM companies that manage multiple blocks
• Owner portal so leaseholders can view their account and payment history

Conclusion

The Right to Manage is one of the most powerful rights available to UK leaseholders. Setting up an RTM company requires some initial legal and administrative work, but the long-term benefits — lower costs, better management, and genuine control over your building — make it worthwhile for many blocks.

If you're considering RTM or have recently acquired the Right to Manage, PropLinker can handle the ongoing management administration from day one.