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Leasehold and Freehold Reform Act 2024 (LAFRA): Right to Manage Update
Right to Manage (RTM) reforms introduced by LAFRA are to be implemented next Monday, 3 March 2025. As anticipated, these changes will present new challenges for those who own and manage properties in England and Wales.
The table below summarises both the forthcoming changes and implications.
| IMPLEMENTATION DATE: 3 MARCH 2025 | ||
| Topic | Key Change | Implications |
| RTM – Procedure | The non-residential limit for RTM claims increases from 25% to 50%. This means that buildings with non-residential areas up to 50% of the total internal floor area now qualify for RTM. | More mixed-use buildings will qualify, increasing the eligibility for RTM companies. More opportunities for leaseholders to assume control via RTM. |
| RTM – Cost Reforms | RTM companies and members are no longer automatically liable for landlords’ costs when initiating a claim. Costs can only be recovered if (i) ordered by a Court or Tribunal; (ii) the RTM Company withdraws the claim or it ceases to have effect; or (iii) the RTM Company acts unreasonably. Further, Landlords cannot recover costs incurred before a Tribunal or Court. Lease clauses allowing landlords to recover these costs are rendered void. Landlords are also prohibited from recovering costs via service charges from non-participating tenants. | Reduced ability to recover legal costs from RTM companies, which also reduces the financial risk for RTM companies and encourages greater participation from leaseholders. Limited avenues to recoup expenses unless specific conditions are met. |
| RTM: Amendments to Model Articles | A cap on landlords’ voting rights, now limited to one-third of the total votes exercised by qualifying tenants. | Landlords’ control over RTM decisions is reduced and further enhances leaseholders’ control over property management. |
| Jurisdictional Changes | The First-tier Tribunal (FTT) will replace the County Court in enforcing obligations under the RTM legislation. Applicants can approach the County Court to enforce FTT orders against third parties (excluding monetary payments). | Landlords will need to familiarise themselves with FTT rules and procedures. |
The RTM changes reflect the Government’s aim to empower leaseholders to take greater control in respect of the management of their properties and we await implementation of the further promised reforms with interest.
To discuss any of the points raised in this article, for more guidance on the impact of LAFRA 2024 or assistance with property-related disputes, please contact Daniel Blake (Partner) and Ann Goh (Solicitor) or fill in the form below.
This article does not constitute legal advice.
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