What Is an RTM Company Responsible For?

Once a Right to Manage claim succeeds, the RTM company holds the landlord's management functions for the building. This guide explains what those responsibilities are in practice, what stays with the freeholder, and what the directors are personally expected to do.

It is written for directors who have just been appointed and for leaseholders trying to work out whether their RTM company is doing its job. If you are still at the application stage, the statutory process is covered separately in our step-by-step RTM process guide.

1. What an RTM company is, legally

An RTM company is a private company limited by guarantee, set up under the Commonhold and Leasehold Reform Act 2002. Once the qualifying tests are met and the statutory notices are served, the RTM company takes over the management functions of the lease from the freeholder. It does not take ownership of the building - the freeholder still owns the freehold - but it controls the day-to-day management.

2. What functions transfer to the RTM

The Act transfers the "management functions" of the freeholder. In practice that means:

• Service charge budgeting, demanding and collection
• Maintaining the structure, exterior and common parts of the building
• Arranging buildings insurance for the structure
• Instructing and managing contractors
• Running Section 20 consultation for major works
• Coordinating statutory compliance - fire risk assessment, EICR, asbestos, water hygiene, lift LOLER
• Enforcing lease covenants on use of communal areas
• Dealing with leaseholder complaints and disrepair claims

3. What does not transfer

RTM does not take over everything. The freeholder retains:

• Ground rent collection (in the leases where it is still payable)
• Granting lease extensions and licences to assign
• Forfeiture and breach of covenant action against leaseholders
• Ownership of the freehold and any reversionary interest

If leaseholders want any of that, they need a different route - collective enfranchisement to buy the freehold, or individual statutory lease extensions.

4. The director's actual job

RTM directors are company directors under the Companies Act 2006. Their duties are the same as any other director - to act in the interests of the company, exercise reasonable care and skill, and avoid conflicts of interest. In a residential RTM context, that translates into a handful of practical responsibilities:

1. Setting the annual service charge budget and approving year-end accounts
2. Appointing and supervising the managing agent (or running it themselves)
3. Approving major works and signing off Section 20 consultations
4. Approving insurance renewal and the level of cover
5. Filing Confirmation Statement and accounts at Companies House each year
6. Holding an AGM at least once a year and minuting key decisions
7. Dealing with leaseholder complaints that escalate beyond the agent

What directors do not do, in a well-run RTM, is chase plumbers themselves. The point of a managing agent is to absorb that workload. The directors set policy, the agent delivers it.

5. The relationship between directors and the agent

The cleanest model is also the simplest. The RTM directors hold the contract; the managing agent operates within it. The agent issues service charge demands in the RTM's name, banks money in a designated client account, instructs contractors, and reports back to the directors monthly. Major decisions - insurance, major works, budget - go to the board for approval.

Where this breaks down is when directors try to make every operational decision themselves, or conversely when the agent makes major decisions without consulting the board. Both are common. Both are fixable with a clear management agreement and a regular reporting rhythm.

6. Common East London RTM realities

Mixed-use blocks

Many East London blocks - particularly in Stratford, Canary Wharf, Ilford and Walthamstow - have ground floor commercial units. RTM only covers the residential premises and the common parts serving them. Commercial leases stay with the freeholder. The split is usually handled with a schedule of apportionment in the service charge.

Building Safety Act blocks

If your block is over 18 metres or seven storeys with at least two residential units, it is a higher-risk building under the Building Safety Act. The RTM company can still run the block, but the Principal Accountable Person duties are non-delegable, and the directors will need to register the building with the Building Safety Regulator and maintain a safety case. This is specialist work and almost always requires a managing agent who knows what they are doing.

Estate rentcharges

On many new-build estates in East London, the RTM only covers the building itself. An estate management company - sometimes the developer, sometimes a separate company - looks after roads, landscaping and open space. Leaseholders pay both. Worth knowing which pot pays for what before fielding complaints.

7. Signs your RTM is well run

• Annual budget circulated to leaseholders before the year starts
• Quarterly or monthly management reports to the directors
• Year-end service charge accounts produced within six months
• An up-to-date fire risk assessment and EICR on file
• Section 20 consultations followed properly when needed
• Companies House filings up to date
• An AGM held each year with proper minutes

If any of those are missing, the question is not whether to act, but how quickly.

General guidance only, not legal advice. RTM is governed by the Commonhold and Leasehold Reform Act 2002. For specific situations consult a solicitor or LEASE.