Reference

Glossary

Simple definitions for words you will see when reading about RTM. They are for general learning — not formal legal definitions.

Acquisition date: The date on which management of a building transfers to the RTM company. It falls a set period after the claim notice is served, as the legislation requires.
Claim notice: A formal notice used in the RTM process to claim the right to manage, served on the landlord as the legislation requires.
Collective enfranchisement: The right of leaseholders to collectively purchase the freehold of their building. This is a separate process from RTM and involves buying ownership, not just management.
Commonhold and Leasehold Reform Act 2002: The Act that (among other things) introduced RTM in England and Wales. Always check the current text and any later amendments.
Counter-notice: A notice served by the landlord in response to an RTM claim notice, either admitting or disputing the claim.
Deferment rate: A percentage used in lease extension valuations to calculate the present value of the freeholder's right to receive the property back at lease expiry. The standard rate following the Sportelli case is 5%.
Enfranchisement: The process by which leaseholders acquire freehold ownership, either individually (for houses) or collectively (for flats).
First-tier Tribunal (Property Chamber): The tribunal that hears disputes about leasehold matters in England, including contested RTM claims and service charge disputes.
Forfeiture: The legal process by which a landlord can seek to end a lease due to a breach of its terms. Subject to strict legal protections for leaseholders.
Freehold: Outright ownership of a property and the land it stands on, with no time limit. The freeholder is the landlord in a leasehold arrangement.
Ground rent: An annual payment from a leaseholder to the freeholder under the terms of the lease. Ground rent on new leases granted after 30 June 2022 must be zero (peppercorn).
Leasehold: A form of property ownership in which the owner holds the property for a fixed term under a lease, rather than owning it outright.
Leasehold Reform: Changes to leasehold law, most recently through the Leasehold and Freehold Reform Act 2024, which introduced new rights and protections for leaseholders.
Leaseholder: Someone who holds a lease of a flat — often the owner with a long lease. In RTM, qualifying leaseholders are central to tests such as participation and lease length.
Long lease: A lease originally granted for more than 21 years. This is one of the key qualifying conditions for RTM participation.
Managing agent: A company appointed to run the building on behalf of the landlord or the RTM company. RTM can replace the previous management arrangements if the process completes successfully.
Marriage value: The increase in a property's value that results from extending a short lease. Where a lease has fewer than 80 years remaining, leaseholders must share 50% of this uplift with the freeholder under the statutory lease extension formula.
Notice of Invitation to Participate: A notice served on qualifying leaseholders who are not yet members of the RTM company, inviting them to join before the claim notice is served.
Participation notice: A notice inviting eligible leaseholders to become members of the RTM company, used at the appropriate stage of the process.
Peppercorn rent: A nominal ground rent, effectively zero. All new residential leases granted after 30 June 2022 must be at peppercorn rent.
Qualifying lease: A lease that meets the statutory tests — for example, originally granted for more than 21 years in many cases.
Qualifying tenant: A leaseholder who meets the statutory criteria to participate in RTM — principally holding a long lease of a flat in the relevant building.
Relativity: In lease extension valuations, the percentage of freehold value that a leasehold interest represents at a given lease length. Used to calculate marriage value.
Resident landlord exemption: An exception to RTM eligibility that applies to converted buildings with four or fewer flats where the freeholder lives in one of them.
Right of first refusal: The statutory right of leaseholders to be offered the opportunity to purchase the freehold if the freeholder decides to sell.
RTM company: A company formed by leaseholders to exercise the Right to Manage and take on management responsibilities after the statutory transfer date.
Section 20 consultation: A statutory process that landlords must follow before carrying out major works or entering long-term contracts, giving leaseholders the opportunity to comment and nominate contractors.
Self-management: Where leaseholders who have exercised RTM choose to manage their building directly through the RTM company, without appointing a managing agent.
Service charge: Payments made by leaseholders toward the cost of maintaining and insuring the building and shared areas. After RTM, the RTM company controls how service charges are set and spent.
Service charges: Payments by leaseholders toward maintaining and insuring the building and shared areas. Who sets and collects them may change when RTM applies.
Sportelli: A landmark Upper Tribunal case that established the standard 5% deferment rate used in lease extension and enfranchisement valuations.
Transfer date: See acquisition date.
Two-year rule: The former requirement that a leaseholder must have owned their flat for at least two years before exercising the right to extend their lease or participate in collective enfranchissement. Abolished by the Leasehold and Freehold Reform Act 2024.