Right to Manage vs Taking your management company to court: Which option is better?

Although all options can improve how a building is run, they work in very different ways. Purchasing the freehold can be expensive depending on the premium so many leaseholders would prefer to go down the RTM or court route. Below I have set out the potential benefits and disadvantages to both the RTM process or taking your management company to court. 

What is Right to Manage (RTM)?

The Right to Manage process allows leaseholders to take over the management of their building without having to prove that the landlord or managing company has done anything wrong. Leaseholders create an RTM company and take responsibility for managing the building themselves. 

In order to qualify for the RTM at least 50% of the leaseholders within the flat must agree to take part. You will need an RTM company to be set up which is a specific company where the Articles of Association are set up to function as an RTM company.  You will also need to ensure the following: 

1. The building must be at least 50% residential- this is based on floor space;
2. The building must be a self contained building that is structurally detached;
3. The Landlord is not a Local Authority; 

The building contains more than two flats which are owned by qualifying leaseholders. This means individuals whoown a flat with a long lease (over 21 years) when the lease was initially granted. 

If the criteria are met, you may be able to qualify for an RTM claim as long as the Landlord does not have any exemptions. 

One of the biggest advantages of RTM is that leaseholders do not need to prove mismanagement. This makes the process simpler than going to Tribunal because there is no need to gather large amounts of evidence or prove wrongdoing.

RTM also gives leaseholders greater control over service charge spending and management decisions. Leaseholders can choose their own contractors, compare prices, and appoint a new managing agent if they wish. This often leads to better value for money and improved transparency.

Another advantage is that RTM can reduce long term disputes. Instead of constantly challenging the landlord or management company, leaseholders are able to make decisions themselves.

RTM can also be quicker and more cost effective than Tribunal proceedings because the process is not based on fault and there is a legally process to follow. The reforms which were implemented on 3rd March 2025 mean that leaseholders going ahead with RTM claims do not have to pay their freeholder’s legal costs. This has made challenge to RTM claims significantly reduce in the past 12 months and also reduced the overall cost to RTM companies when making their claim. 

Although RTM gives leaseholders control, it also gives them responsibility. The RTM company becomes legally responsible for managing the building properly.

This includes responsibilities such as:

• Health and safety compliance
• Fire safety obligations
• Managing contractors
• Building Insurance
• Handling accounts and company records
• Following the management covenants under the Lease

Many RTM companies rely on volunteer directors who may have little experience in property management. This can sometimes lead to disagreements, stress, or poor organisation.

Finally, not every building qualifies for RTM because there are legal rules about the type and size of building that can apply so it is important to seek legal advice in the first instance. 

Removing a management company through Tribunal

The process of taking a management company to court for mismanagement is called an application for the appointment of a manager. This is made under Section 24, Part II of the Landlord and Tenant Act 1987 (LTA 1987). The application is not made to a traditional court but to the First-tier Tribunal (FTT). This allows residential tenants with long leases to apply for an independent manager to be appointed to take over the management of their premises on grounds of default, including mismanagement by the landlord or management company. Unlike RTM, leaseholders must prove that the management company or landlord has acted improperly.

In order to apply for the appointment the leaseholder/leaseholders must prove one or more of the following grounds: 

1. a relevant person is in breach of an obligation owed to the tenant(s) under the terms of the lease(s) relating to the management of the building;
2. a relevant person has demanded or is likely to demand unreasonable service charges or administration charge; or
3. a relevant person has failed to comply with any relevant code of practice approved by the Secretary of State under section 87 of the Leasehold Reform, Housing and Urban Development Act 1993.

The tribunal may only make an order where it is satisfied of one of these circumstances has taken place and that it is just and convenient to make the order. The relevant person is the Landlord, management company or anyone who owes the leaseholders to perform the management covenants under the lease. 

One advantage of this route is that leaseholders can apply for this on their own or as a group of leaseholders acting together, this means you do not need the same majority as you do for RTM. To qualify for this right, the building must contain two or more flats. 

The Tribunal can appoint an independent professional manager to take over the building. This can be useful in larger or more complicated developments where leaseholders do not want the responsibility of managing the building themselves.

This option may also work better where leaseholders disagree with each other and cannot work together effectively. An independent manager can make decisions without internal disputes affecting the running of the building.

The main disadvantage is that leaseholders must prove mismanagement. This can be difficult, time-consuming, and expensive. Leaseholders may need evidence to prove this including financial records. There is also no guarantee of success.

Even if leaseholders believe management has been poor, the Tribunal may decide there is not enough evidence to remove the manager.

Court and Tribunal proceedings can also become costly because of solicitor fees, barristers, surveyors, and expert witnesses.

Conclusion

Both RTM and Tribunal action can improve poor building management, but they achieve this in different ways.

RTM is often better where leaseholders generally work well together and want long term control over how their building is managed. It can also be more suitable where leaseholders simply want better transparency and value for money.

Taking action through the courts or Tribunal may be better where there has been serious mismanagement or where leaseholders do not want the responsibility of running the building themselves.

In practice, many RTM companies still hire professional managing agents after taking control. The difference is that the leaseholders choose and supervise the managing agent rather than the freeholder.

RTM allows leaseholders to take control of management without proving fault, but it also gives them legal responsibilities. Tribunal action focuses on proving mismanagement and asking the court to appoint a new manager, but this process can be slower, more expensive, and less certain.

Whether you are considering the Right to Manage or pursuing a Tribunal application, navigating the legal complexities requires expert guidance. Contact Alisha Maidment on 020 8461 6122, or a member of our Leasehold and Residential Conveyancing team to discuss your options.