Right to Manage, But No Budget: How Leaseholders Can Unlock the Funding to Take Control

By the time a group of leaseholders is seriously discussing RTM, the frustration has usually been building for a while. Poor communication. Rising service charges with no clear justification. Repairs that never seem to happen. A sense that the building could and should be managed better.

The legal right is there. The appetite is there.

But the money often is not.

That creates an obvious problem. If leaseholders have a statutory right designed to give them control over how their building is managed, but cannot afford the process required to get there, what options actually exist?

Why funding is a real barrier

The assumption in smaller blocks is usually that participating leaseholders simply split the costs between them.

In some cases, that works. But in larger developments, or where enthusiasm is uneven across the building, collecting several thousand pounds in advance becomes complicated. Some leaseholders may support the principle but lack available cash. Others may be reluctant to commit funds before the outcome is clear.

That dynamic — where an RTM is viable on paper but stalled in practice — is more common than the sector tends to acknowledge. Viable groups with genuine legal standing fail to progress not because of any legal obstacle, but because of a short-term funding gap that nobody has a clear answer for.

But funding routes do exist.

Shared contributions

The most straightforward route remains a collective contribution among participating leaseholders.

Legal fees, company formation costs, statutory notices, any valuation or advisory input needed, and the costs associated with managing agent transition are divided among those taking part. It keeps the process clean and avoids commercial complexity.

The challenge is execution. People pay at different speeds. Commitment levels vary. Where a small number of leaseholders end up funding the majority of the process, questions about fairness tend to follow. And where money has been advanced in good faith, those questions can become difficult if the RTM ultimately does not succeed.

Deferred fee arrangements

Some solicitors and specialist RTM advisers will structure deferred or staged payment arrangements, reducing the immediate capital requirement and spreading costs across the life of the project.

The obvious challenge is risk. Not every adviser is willing to take that position, particularly with a newly formed leaseholder group where there is limited commercial track record. But it is worth exploring early in the process, because where it is available, it can make an otherwise unviable RTM workable.

Third-party funding

A less commonly discussed option is external investment.

This is where a third party — an investor, operator, or strategic partner — funds some or all of the RTM process in exchange for a commercial return. That return typically takes the form of a management appointment, a longer-term service relationship, or another agreed commercial arrangement.

For leaseholders, the appeal is clear. The capital barrier is removed, and the process can move forward. For the funding party, the opportunity lies in acquiring a long-term management relationship or related service income from a building they would not otherwise have access to.

This model is well established in other parts of the property sector. Its use in RTM remains limited, but that is beginning to change as the market matures and awareness of the option grows.

The critical consideration for leaseholders is independence. Any funding arrangement needs to be clearly documented, with leaseholders fully understanding what commitments they are entering into and whether they retain genuine control over future management decisions. The goal is to resolve one dependency, not create another.

Hybrid structures

Between self-funding and full external investment, there are a range of structures that can make previously unviable RTM projects work.

Partial leaseholder contributions combined with deferred balances. Professional fees funded upfront and recovered over time. Transition costs absorbed by an incoming managing agent as part of a wider appointment. Commercial support tied to related activity such as lease extensions or planned building works.

These arrangements require clear documentation and a degree of transparency that not every party will be comfortable with. But where the legal and commercial terms are properly structured, they can unlock RTM opportunities that would otherwise not progress.

Is RTM always the right answer?

It is worth stepping back and asking that question honestly.

RTM creates rights. It also creates responsibilities. Governance, financial oversight, compliance, contractor management, budgeting, major works decisions, and day-to-day communication all need to be handled properly and consistently. For some buildings, that works extremely well. For others, it introduces challenges that were not anticipated.

Not every poorly managed building requires RTM. Sometimes the issue is the managing agent rather than the ownership structure, and replacing the agent through existing governance routes is more straightforward. In more serious cases, appointing a tribunal manager under Section 24 may be the more appropriate remedy.

The right answer depends on the building, the leaseholder group, the nature of the problems being experienced, and the capacity of residents to take on what self-management genuinely involves.

The wider issue

The fact that funding is such a consistent obstacle raises a broader question about how the RTM right works in practice.

If leaseholders have a statutory right designed to improve accountability and control, it seems contradictory that access to that right should depend on available cash. The legal framework exists. The practical pathway to exercising it does not always follow.

That is why alternative funding models matter. Not because every RTM should be externally financed, but because viable groups with genuine legal standing should not be prevented from exercising a statutory right by a short-term financial barrier that more creative structures could address.

As the residential management sector continues to develop, funding solutions around RTM are likely to become more sophisticated and more widely available. Where demand exists, capital tends to follow.

For leaseholders trying to exercise a right they already have, that may prove to be one of the more significant developments in the sector over the next few years.

Joshua Prince MRICS, Founder & CEO, Temphis