Legal update - 27 August 2026
Supreme Court Rules on Right to Manage Participation Notices: Avon Freeholds v Cresta Court
The Supreme Court has allowed the RTM company's appeal in Avon Freeholds Limited v Cresta Court E RTM Company Limited [2026] UKSC 31 and restored the decision of the Upper Tribunal.
Read our Right to Manage guidanceKey takeaway
On 27 August 2026 the Supreme Court handed down judgment in Avon Freeholds Limited v Cresta Court E RTM Company Limited [2026] UKSC 31. The RTM company had failed to give a notice inviting participation to one qualifying tenant, and had not left the 14 days required before serving its claim notice. The Court held that a landlord cannot rely on breaches of sections 78(1) and 79(2) of the Commonhold and Leasehold Reform Act 2002 as the basis for a counter-notice disputing the RTM company's entitlement. The remedy for a tenant affected by such a default lies in the discretionary jurisdiction under section 107. The appeal was allowed and the Upper Tribunal's decision restored. The statutory steps still have to be followed properly.
What the case was about
Cresta Court E RTM Company Limited sought to acquire the Right to Manage a block of flats. Ms O'Connor held a 150-year lease of Flat 17. Registration of her lease was still pending at HM Land Registry when the claim notice was served, and was later backdated to 15 July 2021.
She was accepted as a qualifying tenant. She had not been given a notice inviting participation, she supported the claim, and she became a member of the RTM company after the claim notice was served. The landlord, Avon Freeholds Limited, argued that the omission meant the claim notice was invalid and the Right to Manage had not been acquired.
The First-tier Tribunal and the Upper Tribunal allowed the claim to succeed. The Court of Appeal took a different view and held that the failure invalidated the claim. The RTM company appealed to the Supreme Court.
What the Supreme Court decided
Judgment was given by Lord Briggs, with Lord Reed, Lord Stephens, Lady Rose and Lord Snowden agreeing. The appeal was allowed and the decision of the Upper Tribunal restored.
The Court accepted that the RTM company was in procedural default: it had not served a notice inviting participation on Ms O'Connor and had not waited the 14 days required by section 79(2). It also found that the company met the substantive eligibility conditions for the Right to Manage.
The central holding is about consequence rather than duty. A landlord may not rely on breaches of sections 78(1) and 79(2) as the basis for a counter-notice or for disputing the RTM company's entitlement to acquire the right. Parliament could not have intended such a default to defeat acquisition unless the affected qualifying tenant invokes the discretionary jurisdiction in section 107.
On these facts, the Court found no rational basis for concluding that the omission caused prejudice to the landlord, to Ms O'Connor or to anyone else. In the closing words of the judgment: "For those reasons I would allow this appeal, and restore the decision of the Upper Tribunal."
Section 107 is the route for a tenant who was left out
Section 107 of the Commonhold and Leasehold Reform Act 2002 allows a person interested to apply for an order requiring a default in complying with Chapter 1 to be made good. The Supreme Court treated that as the mechanism Parliament provided for defaults of this kind, and indicated that considerations such as prejudice and blame may be relevant to how the discretion is exercised.
The Court also declined to give an unaffected person a windfall power to defeat the statutory process, and cautioned against procedural traps and unnecessary restarts of valid claims. That is not a licence to be careless. It is a reminder that the remedy is targeted at the tenant who was actually affected.
This is not a green light to skip statutory steps
Sections 78 and 79 still say what they said before. The Supreme Court has changed the consequence of a default, not the requirement to comply with the procedure. An RTM company that treats participation notices as optional invites section 107 proceedings, delay and cost that a careful process would have avoided.
The practical discipline for directors is unchanged: identify every flat and every qualifying tenant, investigate recent sales and pending Land Registry applications, give each notice properly, record how and when it was given, and allow the statutory period to run before the claim notice goes out. Our Right to Manage guidance and the step-by-step RTM process set that out in order.
What happens once the right is acquired
A successful claim is the start of the work rather than the end of it. The RTM company takes on budgets, service charge accounting, insurance, compliance and the handover of records and funds from the outgoing agent. Handover is where most newly formed companies lose time.
We support resident-led companies through that stage through our RTM company management service and our RTM handover support. If you are choosing an agent for the first time, our guide to choosing a block managing agent sets out what to ask.
East Valley Properties was not involved in this case. This article summarises a published judgment for general information.
What does this mean in practice?
The judgment removes one line of attack on RTM claims. It does not change the work that makes a claim safe in the first place.
If you are one of the rtm directors
- Keep serving notices inviting participation properly. The duty in sections 78 and 79 has not changed, only the consequence of a default.
- If a claim was abandoned, restarted or defended because of the Court of Appeal decision, review the position with your solicitor now.
- Keep a written record of who was identified as a qualifying tenant, and how and when each notice was given.
If you are one of the rmc directors
- If leaseholders in another block you are involved with are considering RTM, the participation stage is still the part that needs care.
- Plan the management handover alongside the claim rather than after it.
If you are one of the leaseholders
- If you were not invited to participate in a claim affecting your flat, section 107 is the route to raise it. Take advice on whether it is worth pursuing.
- Tell the RTM company promptly if you have recently bought your flat, so you are not missed from the list.
If you are one of the freeholders
- A counter-notice can no longer be founded on a breach of sections 78(1) and 79(2) alone.
- Assess any remaining grounds on their own merits before incurring costs on a challenge.
Common mistakes
Reading the judgment as making participation notices optional
The statutory steps remain. The Court addressed what happens when they are not followed, and pointed to section 107 as the remedy for the tenant affected.
Assuming every procedural defect is now cured
The decision concerns sections 78(1) and 79(2). Other requirements in the RTM regime have their own case law and their own consequences.
Treating the outcome as automatic regardless of prejudice
The Court found no prejudice on these facts and identified section 107 as a discretionary jurisdiction in which prejudice and blame may be relevant.
Not revisiting a claim that was dropped on the old authority
Claims withdrawn or restarted because of the Court of Appeal position are worth reviewing with a solicitor in light of the Supreme Court judgment.
When to seek professional advice
Most questions on this topic are management questions rather than legal ones, and the two are worth separating. A managing agent can tell you how something works day to day and what it will cost. A solicitor tells you what your rights are and how a Tribunal is likely to view them.
Speak to a managing agent when
- You are preparing an RTM claim and want the qualifying tenant list and notice records checked before anything is served.
- The right has been acquired and you need budgets, accounts, insurance and compliance in place from the acquisition date.
- The outgoing agent is slow with handover of records or funds.
Take specialist legal advice when
- A claim notice has already been served and a possible omission has come to light.
- A counter-notice has been served, or section 107 proceedings are threatened or under way.
- You need advice on how this judgment applies to the specific notices and dates in your claim.
East Valley Properties provides management expertise, not legal advice. Where a matter turns on the wording of your lease or on formal proceedings, we will say so and work alongside your solicitor.
Primary sources
The official material behind this guide. We summarise it in plain English rather than reproducing it.
- UK Supreme Court case page - Avon Freeholds Limited v Cresta Court E RTM Company Limited (UKSC/2025/0170)
The official case page, including the issue, the facts and the judgment details.
- Avon Freeholds Limited v Cresta Court E RTM Company Limited [2026] UKSC 31 (Find Case Law, The National Archives)
The full text of the judgment handed down on 27 August 2026.
- Commonhold and Leasehold Reform Act 2002, Part 2, Chapter 1 - Right to Manage (legislation.gov.uk)
Includes section 78 (notice inviting participation), section 79 (claim notice) and section 107 (enforcement of obligations).
Frequently Asked Questions
Written by Romain Maillard - Director, East Valley Properties
Romain manages residential blocks and estates for RTM companies, residents' management companies, share of freehold developments and freeholders across East London and Essex.
Published
This article is general information about a published court judgment and is not legal advice. East Valley Properties is a managing agent, not a firm of solicitors. Take advice on your own claim.
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