In the ever-evolving landscape of property law, few regimes have generated as many practical challenges as the Right to Manage (RTM). Established under the Commonhold and Leasehold Reform Act 2002 (CLRA), the RTM was pitched as a transformative mechanism that granted residential leaseholders a collective right to take back control over the management of their building from landlords. Yet, from the outset, its scope had been tightly ring-fenced, particularly for those in mixed-use buildings where retail, office, or hospitality spaces mingle with residential homes.
This limitation has now shifted significantly. As of 3 March 2025, under the Leasehold and Freehold Reform Act 2024 (LFRA), key legislative changes have come into force, recasting the boundaries of eligibility, financial liability, and internal governance of RTM companies. These changes signal a notable recalibration of the legal landscape, particularly for mixed-use premises, and invite landlords, tenants, and property managers alike to reconsider their positions.
The foundation of leaseholder control
Before exploring the reforms, it is worth revisiting the purpose and mechanics of the RTM. The RTM offers long-term residential leaseholders the ability to take control of the management of their building, such as overseeing service charges, maintenance, and compliance, without the need to prove landlord fault or mismanagement. The eligibility criteria are deliberately precise – the building must contain at least two flats, and at least two-thirds of these must be owned by qualifying tenants with long leases.
Historically, however, the legislation fell short for those in buildings with significant non-residential elements. The reasoning behind this was largely practical, in that blending commercial and residential interests in the same management structure presents complexities that Parliament once preferred to avoid. But this has now changed.
Mixed-use premises
Under the CLRA’s original provisions, if a building contained more than 25% non-residential internal floor area, leaseholders were barred from exercising the RTM. This excluded many mixed-use developments in town centres and urban regeneration zones where retail and residential interlace as part of modern planning initiatives.
Section 49 of the LFRA now raises the non-residential floor area threshold to 50%. In effect, this brings a substantial number of previously ineligible buildings within the reach of the RTM regime. A mixed-use block comprising a grocery store, café, and 10 flats, where the commercial premises make up just under half of the internal area, would now qualify for an RTM claim, where it would not have before.
This change is not just technical. It redefines the balance of control between leaseholders and landlords in these hybrid spaces. Where developers previously structured buildings to exceed the 25% threshold and avoid RTM, they will now need to cross the 50% line to achieve the same outcome. Buildings that hover near this margin may find themselves unexpectedly caught by the new rule, necessitating swift legal reassessment.
A shift in financial burden
Another key reform is financial, and potentially game-changing in its implications. Previously, while an RTM claim did not require leaseholders to pay a premium or compensation to the landlord, the landlord’s reasonable costs incurred in response to the claim were recoverable from the RTM company. For many leaseholders, particularly in modest or stretched financial circumstances, the prospect of having to pay the landlord’s legal and valuation costs was a significant deterrent.
Section 50 of the LFRA alters this dynamic. Now, each party is generally responsible for their own costs unless a party acts unreasonably or the RTM company withdraws its claim. This reduces the financial risk for leaseholders seeking to exercise the RTM and is likely to result in more claims, especially in buildings where residents may have previously been dissuaded by the uncertainty of legal bills. Conversely, landlords may now find themselves more circumspect about opposing claims without strong legal grounds.
Voting rights rebalanced
With control comes governance. RTM companies are governed by their members, which are typically qualifying leaseholders. However, landlords who hold leases for commercial units have historically also had a say in the RTM company, sometimes wielding disproportionate influence.
This imbalance has now been addressed. Amendments to the model articles for RTM companies limit the voting rights of landlords holding leases of any part of the premises. As of 3 March 2025, such landlords must also be the freeholder of the premises to vote, and even then, their vote is capped at one-third of the total votes exercisable by qualifying tenants.
This ensures that control is appropriately centred in the hands of the residential leaseholders whose day-to-day lives are directly impacted by the building’s management. It prevents landlords from undermining the RTM company’s decisions or using it as a vehicle to influence service contracts or expenditure.
What these changes mean in practice
Taken together, these reforms represent a significant rebalancing of rights and responsibilities in favour of residential leaseholders, particularly those in mixed-use buildings. They open the doors to RTM for thousands of developments previously left out in the cold, and remove key legal and financial barriers that once made claims impractical.
For landlords, the message is clear. RTM is no longer a niche exception but a mainstream possibility. Strategies for mixed-use development, asset management, and lease drafting must now take into account the broader application of the RTM regime.
For leaseholders, this is an empowering moment, but one that still requires careful, structured legal guidance. Establishing an RTM company, preparing the claim, and navigating any disputes remain legally complex processes. While the path has been smoothed, it is not without its hurdles.
Review and preparation
At Buckles Solicitors, we understand that these changes affect communities, investors, and management agents across the property spectrum. Whether you are a leaseholder considering your right to manage, a landlord reassessing your holdings, or a developer navigating compliance, now is the time to review your position.
The law has evolved. The rights of leaseholders in mixed-use buildings have been significantly expanded. But with greater access comes the need for greater diligence. We are here to help you navigate these reforms, assess your options, and support you in reaching a legally sound and practical resolution.
