RTM company

An RTM company is the private company limited by guarantee that the leaseholders of a block of flats in England or Wales form to claim and then exercise the right to manage under Part 2 of the Commonhold and Leasehold Reform Act 2002. Its articles of association are fixed by the RTM Companies (Model Articles) (England) Regulations 2009, or the 2011 Welsh equivalent, and each member’s liability is limited to £1.

The right to manage entry covers which buildings qualify and how the claim works. This entry covers the company itself: how it is formed, who belongs to it, what its directors are responsible for and how it pays its way.

How an RTM company is set up

Leaseholders register the company at Companies House as a private company limited by guarantee with no share capital. Its name must end with “RTM Company Limited” or “RTM Limited”, and the Leasehold Advisory Service says it must have at least two directors. The articles must follow the prescribed form, and the company’s object is limited to acquiring and exercising the right to manage for one named building. One company cannot hold the right to manage more than one set of premises.

Who can be a member

Every qualifying tenant in the building, broadly anyone holding a long lease of a flat, is entitled to join. Joint owners of a flat count as one member. Nobody can be forced to join, and a leaseholder who stays out is still bound by their lease and still pays the service charge. Once the company acquires management, the freeholder is also entitled to become a member. Membership follows the flat, so when a member sells, the buyer can join in their place.

What the directors are responsible for

RTM directors are usually unpaid volunteer leaseholders, but they carry the full duties of company directors under the Companies Act 2006. They must act within the company’s powers, use reasonable care and skill, and declare any conflict of interest. They must also keep the register of members, file a confirmation statement and annual accounts at Companies House, and hold the meetings the articles require.

On top of company law, the company takes on the freeholder’s management duties under the leases. It sets and collects the service charge, insures the building, arranges repairs to the common parts and runs Section 20 consultation before major works. It is usually the responsible person for the communal areas under fire safety law, so it needs a current fire risk assessment. In a higher-risk building it also has duties under the Building Safety Act. Many companies buy directors’ and officers’ insurance and appoint a block management agent, but the directors remain accountable for the agent’s work.

How an RTM company is funded

Before it takes over, the company has no income, so members usually fund the set-up costs themselves, such as the incorporation fee and any professional help with the claim. Since 3 March 2025 freeholders generally bear their own costs of a claim, which has removed the biggest financial risk of applying. On the acquisition date, the freeholder or its agent must hand over any uncommitted service charge money it holds for the building, and from then on the company funds itself through the service charge, holding that money on trust for the leaseholders.

RTM company, residents’ management company or enfranchisement company

An RTM company takes over management under statute without the freeholder’s agreement, but it does not own anything. A residents’ management company usually exists from the day the development is built, and its role comes from the leases. Leaseholders who want to buy the building itself use collective enfranchisement, normally through a separate company limited by shares.

If you let a flat in an RTM block

From working with self-managing landlords across the UK, we find that leaseholder-landlords often stay out of the RTM company and then have no say over the budget that sets their biggest fixed cost. Join, so you can vote on the service charge and on who manages the building. If you become a director, keep your roles separate. You are the landlord to your tenant, but as a director you owe duties to every member. The company’s service charge is a cost you pay, and you cannot recharge it to your tenant as a separate fee under the Tenant Fees Act 2019.

Frequently asked questions

Does every leaseholder have to join the RTM company?

No. Membership is voluntary. Leaseholders who stay out keep paying the service charge under their lease, but they have no vote on how the company runs the building.

Can an RTM company lose the right to manage?

Yes. The right ends if the company is wound up or struck off, or stops being an RTM company. Management then returns to the freeholder, which is why directors need to keep the Companies House filings up to date.

Are RTM company directors personally liable?

A director is not personally liable for the company’s debts simply by being a director, and each member’s liability is limited to £1. A director who breaches their duties under the Companies Act 2006 can still face claims, which is why many companies take out directors’ and officers’ insurance.