RTM: Expectations vs Responsibilities

One of the most common misconceptions is the assumption that forming an RTM company fundamentally alters the financial mechanics of building management. In reality, management costs rarely disappear — they simply change shape.

While certain cost structures may evolve, core obligations remain constant. Buildings still require insurance. Maintenance still demands funding. Compliance responsibilities remain unchanged. The legal right to manage does not remove the legal obligations of management.

The Expectation Gap

RTM companies are frequently established with the belief that greater control will inherently produce greater efficiency. Yet building management is governed less by organisational structure and more by legal, contractual, and regulatory frameworks.

• The building still requires insurance.

• Maintenance still needs funding.

• Statutory obligations remain.

Professional services — accounting, legal, surveying, and regulatory — rarely vanish. They transition from landlord or agent-led arrangements to director-led responsibility.

What changes is not the necessity of these functions, but where accountability now resides.

Governance & Responsibility

Directors of RTM companies assume legal and fiduciary responsibilities comparable to those of any corporate entity.

• Decision-making authority carries corresponding accountability.

• Financial oversight demands structured diligence.

• Compliance failures are not theoretical considerations — they are operational risks.

The role of an RTM director is therefore not merely administrative. It is fundamentally one of governance.

Insurance arrangements, contractor appointments, budget approvals, statutory filings — all require measured, informed decision-making within a defined legal framework.

Financial Planning & Lease Constraints

Financial planning presents another area where expectations and practical constraints frequently diverge.

Reserve funds are widely regarded as prudent — often essential — provisions. Buildings age, components deteriorate, and major works are inevitable. Yet an important legal nuance is sometimes underestimated:

Lease provisions do not always permit the advance collection or retention of funds for future expenditure.

The ability to collect, allocate, or ring-fence funds is governed not by preference, but by the lease itself.

Even well-intentioned financial planning can encounter structural limitations where lease provisions do not support the mechanism. Understanding the lease is therefore not simply good practice — it is fundamental governance.

Expectations surrounding long-term maintenance, future works, and funding strategies must align with the contractual framework governing the building.

Contractor Decisions & Economic Realities

• Contractor selection presents a recurring pressure point.

• Greater control often produces heightened scrutiny of expenditure — entirely reasonably. However, building management economics rarely reward decisions based solely on lowest price.

• Short-term savings can generate long-term expenditure.

• Specification misunderstandings influence outcomes.

• Deferred maintenance amplifies liabilities.

• Lifecycle cost considerations frequently prove more influential than initial quotation values alone.

A Matter of Alignment

Many RTM challenges stem not from conflict, but from misalignment.

• Misalignment between expectations and obligations.

• Between perceived simplicity and operational complexity.

• Between intention and contractual framework.

Right to Manage remains a valuable and important mechanism within the sector. Its success, however, depends less on who holds control and more on how responsibilities are understood, structured, and exercised.

“The most effective RTM arrangements are often those where directors and managing agents operate in tandem. ”

Right to Manage provides the legal right.

Long-term success lies in understanding the responsibilities that accompany it.

David Elsworth, Founder & Director of Worth Property Management