Forming the RTM company
What the RTM company has to be, why the model articles matter, and the decisions to take before you incorporate.
Law stated as at England and Wales
The right is exercised by a company, not by the leaseholders directly. Until the company exists and is properly constituted, nothing else in the process can happen a claim notice given by a company that does not meet the statutory description is not a valid claim notice.
What the company has to be
An RTM company is a private company limited by guarantee whose articles state that its object, or one of its objects, is the acquisition and exercise of the right to manage the premises. It has no share capital; members guarantee a nominal amount, usually £1.
Its articles must be in the prescribed form. Regulations set out model articles for RTM companies, and those were amended with effect from 3 March 2025 alongside the other Right to Manage changes. Using an old set of model articles downloaded from a forum post is a real risk; take the current version from legislation.gov.uk on the day you incorporate.
You cannot adopt whatever articles you like. Where the model articles are prescribed, provisions in your own articles that conflict with them are of no effect, so there is little point paying someone to draft bespoke ones.
Decisions to take before you incorporate
The name. It must end with “RTM Company Limited”. Beyond that, name it after the building, not after the street, if the building has a distinct name you may end up with more than one RTM company on the same road.
One company or several. On an estate of several blocks, each block is normally its own set of premises. You can run separate claims through separate companies, or in some circumstances one company for several buildings, but the analysis needs care and gets it wrong in both directions frequently. If in doubt, one company per building is the conservative route.
Who the directors will be. Directors of an RTM company carry the ordinary duties of a company director under the Companies Act 2006, and they will be signing contracts, holding service charge money on trust and making decisions about safety. Two or three willing directors is usually the right number to start; one is fragile and eight is unmanageable.
Registered office. Directors’ residential addresses are not published if a service address is given, but the company’s registered office is public. Many small RTM companies use the building’s own address; some use an accountant’s.
Incorporation
Incorporation is done at Companies House and is inexpensive. You will need the company name, registered office, the first directors, and the prescribed articles. You do not need a solicitor for this step, though you may want one to check the articles are the current prescribed version before filing.
Once incorporated, set up the register of members immediately and add each participating leaseholder as they join. The membership threshold is tested at the date of the claim notice against the register, so an informal list of supporters is not enough.
Before serving anything
Open a bank account in the company’s name banks are slow with newly incorporated guarantee companies, and you will need somewhere for service charge funds to land on the acquisition date. Consider directors’ and officers’ insurance at the same time.
Then serve the notice of invitation to participate on every qualifying tenant who has not already joined. That is the first statutory step with a clock attached to it.
Sources
- Right to Manage Leasehold Advisory ServiceOpen Government Licence v3.0
- Commonhold and Leasehold Reform Act 2002, section 73legislation.gov.uk Open Government Licence v3.0
- Leasehold and Freehold Reform Act 2024, sections 49 to 52legislation.gov.uk Open Government Licence v3.0
This page contains public sector information licensed under the Open Government Licence v3.0. It has been summarised and re-written by Better Leasehold; any errors are ours. Reproduction here does not imply endorsement by the Leasehold Advisory Service or by any government department.