The Right to Manage Revolution: What Freehold and MUFB Investors Must Know Before 3 March 2026

On 3 March 2026, a significant set of changes to the Right to Manage regime comes into force under the Leasehold and Freehold Reform Act 2024. For investors who hold freeholds of mixed-use buildings — flats above shops, blocks with commercial ground floors, or any multi-unit property with a commercial element — these reforms represent a material shift in the balance of power between freeholders and leaseholders. Understanding what is changing and why it matters is now urgent, not optional.

What Is Changing on 3 March 2026

The Right to Manage allows leaseholders to take over the management of their building from the freeholder without having to prove any fault on the freeholder's part. Previously, this right was restricted to buildings where non-residential floor space did not exceed 25% of the total. From 3 March 2026, that threshold doubles to 50%. In practical terms, thousands more leaseholders in mixed-use buildings — those with shops, offices, or commercial units on the ground floor — now qualify to exercise RTM rights that were previously unavailable to them.

Alongside the eligibility expansion, the cost landscape changes fundamentally. Under the old rules, a leaseholder pursuing an RTM claim was required to pay the freeholder's reasonable legal and professional costs — a provision that effectively acted as a financial deterrent to claims, particularly in smaller blocks where legal bills could run to several thousand pounds. From 3 March, leaseholders are no longer automatically liable for the freeholder's legal costs. Freeholders also lose the ability to recover the costs of non-litigation RTM-related work through service charges, closing off a secondary avenue that some freeholders used to recoup expenses.

A third change shifts where disputes are heard. RTM-related cases will move from the County Court to the First-tier Tribunal (Property Chamber), a specialist property tribunal designed to handle leasehold matters with greater consistency and — in theory — at lower cost and with faster resolution times than the civil court system.

Why This Matters for Freehold and MUFB Investors

For investors who own multi-unit freehold blocks as part of a title splitting or income strategy, the implications are direct and significant. The value of a freehold is not simply the ground rent roll — it also encompasses management control. As freeholder, you typically oversee building insurance, maintenance contracts, major works decisions, service charge administration, and long-term capital planning for the asset. RTM strips all of that away. Once leaseholders successfully complete an RTM claim, they form a Right to Manage company and assume legal responsibility for managing the building, with the freeholder retaining only reversionary ownership.

With the non-residential threshold now at 50%, a building that was previously outside the reach of an RTM claim — because, say, a commercial unit occupied 30% of the floor area — may now be fully eligible. Investors who structured their freehold acquisitions on the assumption that a commercial element protected them from RTM exposure will need to reassess that assumption as a matter of priority.

The removal of cost recovery rights sharpens this risk. Previously, even where an RTM claim was technically valid, the prospect of paying substantial legal bills gave leaseholders reason to hesitate. That deterrent is now gone. The route to management control is both cheaper and more accessible for leaseholders, which means investors should expect RTM activity to increase — particularly in buildings where there have been management disputes, service charge complaints, or historical tensions between landlord and leaseholder.

Assessing Your Exposure Before the Deadline

The immediate priority for any freehold investor holding a mixed-use block is to calculate the non-residential floor space percentage for each asset. If that figure falls below 50%, the building now qualifies for an RTM claim. Investors should also review the current state of leaseholder relations: buildings where there is an active dispute or where service charge transparency has been limited are at elevated risk of a prompt claim once the new rules take effect.

The cost and complexity of defending against an RTM claim have also changed. Without the ability to recover legal costs from the claimants, any contested claim now lands entirely at the freeholder's expense. For smaller blocks with three or four leaseholders, that cost may be modest. For larger blocks, it can be significant. Investors should factor this into their risk modelling and consider whether pre-emptive engagement with leaseholders — through improved service charge communication or transparent maintenance planning — is a more cost-effective strategy than contesting future claims.

It is also worth noting that Right to Manage does not affect the freehold itself. The freeholder retains ownership of the title and continues to receive ground rent where applicable. However, management income — including fees charged for overseeing the building — is lost. For investors who structured acquisitions partly around management income, that represents a direct cash flow impact that needs to be modelled against each asset.

The Broader Reform Context

These RTM changes sit within a wider programme of leasehold reform that is accelerating into 2026 and beyond. The government published the Draft Commonhold and Leasehold Reform Bill in January 2026, which proposes further reforms to enfranchisement valuation, lease extension rights, and ultimately the transition from leasehold to commonhold tenure for new developments. The direction of travel is unmistakably in favour of leaseholder rights and away from freeholder control.

For investors with freehold interests, this is not a reason to exit the strategy — freeholds remain valuable assets with genuine income and capital characteristics — but it is a reason to hold them with a sharper understanding of the legal risks. Title splitting and MUFB investment continue to offer superior risk-adjusted returns compared with vanilla buy-to-let, particularly where the investor retains the freehold post-split and manages the building actively. What changes from 3 March is the importance of doing that management well. Buildings where leaseholders feel fairly treated and transparently charged are far less likely to pursue RTM. Buildings where they do not are now significantly easier to take over. The quality of your management is now directly linked to whether you keep it.