Right to Manage versus Collective Enfranchisement: choosing the right route for leaseholders

This article explores Right to Manage (RTM) and Collective Enfranchisement, two key routes available to leaseholders in the UK. Both options empower leaseholders to take control of their property, but they differ in scope, process, and implications.

Leaseholders often seek greater control over the management or ownership of their building due to various reasons but mainly because they are unhappy with the current management of their Building. The two key routes are:

The Right to Manage (RTM) under the Commonhold and Leasehold Reform Act 2002 (CLRA 2002), which allows leaseholders to assume management responsibilities without acquiring the freehold; and
Collective Enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993), which enables leaseholders to purchase the freehold of their building.

What is Right to Manage (RTM)?

RTM allows qualifying leaseholders of flats to take over the management of their building from the landlord without acquiring the freehold or proving fault on the landlord’s part. This right is exercised through a specially formed Right to Manage (RTM) company.

It gives leaseholders control of their building if they are unhappy with the existing standard of management or to improve value for money and transparency in costs.

The building must meet strict criteria to qualify and at least half the flats in the building must participate.

Is RTM right for you?

Right to manage may be suitable if:

You are unhappy with how the building is being run by the Landlord or managing agents
You want to have more control and be able to make decisions about the building
Costs appear too high and you believe these could be reduced by taking over the management
Other leaseholders in the building are willing to be involved and work together
The right to manage company does not have to do the day-to-day management itself. You can choose to use to appoint a managing agent.
As of March 2025, in accordance with the Leasehold and Freehold Reform Act 2024, the landlord cannot recover any of its costs from the RTM Company in a non-contentious claim which makes this a popular route.

What is Collective Enfranchisement?

Under LRHUDA 1993, leaseholders can compel the landlord to sell the freehold and any intermediate leasehold interests of a qualifying building. This route allows leaseholders to become the Landlord, eliminating ground rent and potentially lowering service charges and providing a say in repairs and management. It allows leaseholders to set fair service charge and manage the building’s finances.

At least half of the flats in the building must be held by qualifying tenants, and the process involves strict procedural and qualification requirements, including service of notices and obtaining valuation advice.

This option also allows leaseholders, following the acquisition, to grant new long leases without further premiums or rents.

The process can take anywhere from six months to a year or longer if the freeholder disputes the claim. Delays often occur during valuation negotiations.

You will also be responsible for the landlord’s legal and valuation costs, which is something to bear in mind when budgeting.

Is Collective Enfranchisement right for you?

This route gives leaseholders greater control over their building by choosing how the building is managed and maintained. It also allows leaseholders to vary their leases by increasing the term to 999 years and reduce the ground rent to a peppercorn (no payment in practice).

With control over the freehold, leaseholders can appoint managing agents or take on management responsibilities themselves. This often leads to happier leaseholders and more transparent budgeting.

Owning a share of the freehold may also boost the market value of individual flats. Buyers typically prefer flats with a share of the freehold together with a long lease with no ground rent, making them more attractive and easier to sell.

Key Differences

The main distinction lies in the scope of control. RTM provides management rights without ownership. The landlord can no longer recover their legal costs from the RTM company making it a less costly and complex option.

In contrast, collective enfranchisement transfers ownership of the freehold, allowing leaseholders to grant new leases and control the property entirely. However, this comes with higher costs and responsibilities, particularly for buildings with short leases or commercial premises.

Which route should leaseholders choose?

The choice between RTM and collective enfranchisement depends on the leaseholders’ primary goals and circumstances. If the main issue is poor management and high service charges RTM offers a straightforward faster route to management control at a lower cost and is a Management Solution.

If the goal is also to eliminate ground rent or fixing a short lease, collective enfranchisement provides comprehensive ownership rights, increases property value and is an investment.