Right to Manage: Whether an application to acquire rights to manage failed due to procedural errors
The First-tier Tribunal considers whether an application to acquire rights to manage failed as a result of errors made by the RTM Company applicant in respect of service of claim notices.
The background
In Royal Riverside RTM Co Ltd v Free Land Property Ltd [2026], the subject property comprised a block of 127 residential flats at a development in Sheffield. The RTM Company sought to acquire rights to manage and served a Notice of Claim on the freeholder on 16 January 2024, which rejected the claim. The RTM Company applied to the First-tier Tribunal for determination that it was entitled to acquire rights to manage.
Procedurally, the RTM Company is required to give a Notice Inviting Participation (“NIP”) in the right to manage application to each qualifying tenant that is not a member of the RTM Company. S.78(2) Commonhold and Leasehold Reform Act 2002 sets out the required information for an NIP.
The freeholder objected to the RTM claim on four grounds, namely that the RTM Company had:
- failed to serve the claim notice on Priestley House Limited (the management company);
- failed to comply with requirements for membership of an RTM Company under the CLRA 2002, as two qualifying tenants listed had assigned leases back to the freeholder prior to service, and the RTM Company had not demonstrated that the membership threshold of qualifying tenants had been reached;
- failed to demonstrate compliance with requirements for service of NIPs contained at s.78 of the CLRA 2002; and
- failed to demonstrate compliance with the requirement to send each qualifying tenant a copy of the claim notice.
The FTT was asked to consider the application and to determine whether the applicant acquired rights to manage.
The decision
The FTT determined that the RTM Company was entitled to acquire rights to manage. In A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd [2024], the Supreme Court found that the RTM Company’s failure to serve the claim notice on the appellant was not fatal to the RTM claim, as the appellant had lost nothing of significance as a result of the omission.
The FTT was guided by A1 Properties in the present case, and found that the management company had not been deprived of anything of value by the RTM Company’s failure. This omission did not invalidate the application for rights to manage.
There was no evidence presented to the FTT that the two qualifying tenants were no longer entitled to membership of the RTM Company, but nevertheless even if one of those tenants was no longer a qualifying tenant, the RTM Company’s 50% membership threshold would still have been met in any event.
The FTT found that the RTM Company was not required to send a copy of the claim notice or the NIP to qualifying tenants within a specific timeframe, and was not required to send the NIP or a copy of the claim notice separately to joint leaseholders, as joint leaseholders are together a single qualifying tenant.
The RTM Company was entitled to send copies of the claim notice to qualifying tenants who were not members of the RTM Company at their flats within the premises, unless it had already been given notice by qualifying tenants of alternative addresses to use for service. Formal consent to service by email was not required, and in any event the claim notice was served by email and post.
The freeholder had sought to require the RTM Company to prove that it had complied with the procedural requirements in the FTT, but did not present a case to answer in relation to the suggested failures. The FTT concluded that this was “not an effective or acceptable means of objecting to acquisition of the right to manage the Premises” and found that rights to manage were acquired.
Advice and action for landlords
This decision follows the guidance of the Supreme Court in A1 Properties, concluding that procedural failures do not necessarily invalidate a right to manage application.
The freeholder in this case had not presented any evidence that it had lost anything of significance as a result of the omissions, and in any event the FTT found that the RTM Company had been entitled to follow the service procedures it had undertaken. The freeholder was unable to challenge the acquisition of the right to manage simply by requiring the RTM Company to demonstrate its own compliance, but instead needed to raise a case to answer itself.
