Written by Brady Solicitors Enfranchisement team. Brady Solicitors advises leaseholders, freeholders and managing agents on lease extensions, collective enfranchisement, and right to manage.
Until August 2026, a freeholder facing a right to manage claim had good reason to check whether every leaseholder in the building had been invited to participate. Failure to invite just one qualifying leaseholder to participate was enough, according to the Court of Appeal, to invalidate the RTM claim notice. However, in Avon Freeholds LTD vs Cresta Court E RTM Company Ltd, the Supreme Court has now reversed that decision, providing important clarification about which procedural failures can affect an RTM claim, when a freeholder can object, and what remedies remain available where the statutory procedure has not been followed.
This article sets out what is required of an RTM company when it serves its notices, how the case was decided at each stage on its way to the Supreme Court, and what the judgment means in practice for leaseholders, freeholders and managing agents.
What the right to manage process requires
The right to manage is governed by Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002. Sections 72 to 77 set the substantive qualifying conditions: including the eligibility of the building, the thresholds required for qualifying tenants, both within the premises and participation, and the constitution of the RTM company.
Sections 78 to 89 then establish the procedure by which the right is claimed, key stages of which are broadly set out below. The Cresta Court case concerned two closely connected requirements: inviting qualifying tenants to participate, and allowing the required period to pass before giving the claim notice.
The notice of invitation to participate. Before it can give a claim notice, the RTM company must give a notice of invitation to participate to every qualifying tenant of a flat in the building who is not already a member of the company and has not agreed to become one (section 78(1)). A qualifying tenant is, broadly, the holder of a long lease of a flat.
The 14 day interval. Section 79(2) provides that the claim notice may not be given until at least 14 days after the last of the participation invitations were sent.
The claim notice. The claim notice is given to the freeholder (or other landlord, and anyone else entitled to receive it under section 79(6)), and a copy goes to each qualifying tenant. It states the date by which a counter-notice may be given and the date on which the company intends to acquire the right to manage.
The counter-notice. The recipient of a claim notice under section 79(6) may respond with a counter-notice under section 84, either admitting the RTM company’s entitlement or disputing that entitlement on certain specified grounds. Importantly, a qualifying tenant who receives a copy of the claim notice under section 79(8) does not have an independent right to challenge the claim by counter-notice in that capacity.
The application to the tribunal. Where a counter-notice disputes entitlement, the RTM company must apply to the First-tier Tribunal for a determination within two months of the counter-notice. If it does not, the claim notice is treated as withdrawn.
Enforcement. Section 107 provides a separate mechanism for enforcing compliance with the statutory requirements. Any interested person may give notice requiring a person who has failed to comply with an obligation under the RTM provisions to remedy that default. If more than 14 days have elapsed since such notice was given without the default being remedied, an application may be made to the appropriate tribunal for an order requiring compliance.
In England this jurisdiction has transferred from the county court to the First-tier Tribunal on 3rd March 2025 following amendments introduced by section 51 of the Leasehold and Freehold Reform Act 2024. The power to make an order is discretionary, and the county court retains a role in enforcing certain tribunal orders.
The point to hold on to is that the Act sets out both the conditions a company must satisfy and the steps it must follow, and says very little about what happens when a step is missed. Cresta Court decided what follows when the notice of invitation requirement is not met, and whether a freeholder can rely on that commission in its counter-notice.
The case overview
Cresta Court in Hanger Lane, London, contains 20 flats. In November 2021 the RTM company formed by the leaseholders gave notices of invitation to participate to every qualifying tenant it had identified, and on 21 January 2022 it gave its claim notice to the freeholder, Avon Freeholds Limited.
However, the RTM company had not identified Ms O’Connor as a qualifying tenant. She held a newly granted long lease of a flat, which was not yet registered at the Land Registry when the claim notice was given. The lease was therefore effective in equity but not at law; she was however held to be a “qualifying tenant” for the purposes of the RTM legislation. She had not received a notice of invitation to participate before the RTM claim was given and had not, at that stage, agreed to join the RTM company.
Ms O’Connor herself had no complaint. She joined the RTM company five days after the claim notice was given and supported it throughout. The objection came from the freeholder, which served a counter-notice alleging that the RTM company was not entitled to acquire the right to manage. It argued that the RTM company failed to comply with two statutory procedural requirements: that it had not given a notice of invitation to participate to all qualifying tenants who had not either become or agreed to become its members (as required by section 78(1)) and that it had not (therefore) waited 14 days after giving such notice to all eligible qualifying tenants before giving a claim notice (as required by section 79(2)). The RTM company applied to the First-tier Tribunal for a determination of its entitlement.
Two questions ran through the case. The first was whether the holder of a granted but unregistered long lease is a qualifying tenant at all, the second, and the one that ultimately reached the Supreme Court, was what the omission of such a tenant did to the claim.
The First-tier Tribunal decision
The First-tier Tribunal held that Ms O’Connor was a qualifying tenant, despite her lease being unregistered at the Land Registry, meaning that she should have received an invitation to participate. However, the Tribunal concluded that the failure to give that notice of invitation to participate did not invalidate the claim notice in the particular circumstances. The Tribunal therefore upheld the RTM company’s claim.
The Upper Tribunal decision
The freeholder appealed, and the RTM company cross-appealed against the finding that Ms O’Connor was a qualifying tenant. The Upper Tribunal agreed that Ms O’Connor was a qualifying tenant, but adopted different reasoning from the FTT of failing to invite her. The Upper Tribunal considered that the claim notice was only voidable rather than automatically void. Ms O’Connor was the qualifying tenant directly affected by this procedural failure, but she had not challenged the validity of the claim; therefore the freeholder could not take advantage of the failure to defeat the acquisition.
The Court of Appeal decision
The Court of Appeal agreed with both tribunals that a lessee under a granted but unregistered long lease is a qualifying tenant. Permission to appeal that finding to the Supreme Court was refused, so that point can be treated as settled.
On the consequence of the omission, however, it disagreed with both tribunals. Section 79(2) prevents a claim notice being given until 14 days after the last invitation has gone out. On the Court of Appeal’s reading, that made the giving of invitations to every qualifying tenant a precondition of a valid claim notice. The notice given in January 2022 was therefore a nullity, and the company should have served a fresh one, at the cost of a short delay.
That was the position following the Court of Appeal’s judgment on 30 July 2025 until the Supreme Court’s judgment on 27 August 2026.
The Supreme Court decision
The Supreme Court allowed the RTM company’s appeal and restored the decision of the Upper Tribunal. Lord Briggs gave the sole judgment of a unanimous court.
The reading of section 79(2). Lord Briggs began with what section 79(2) actually says. It sets a 14 day interval between the last invitation and the claim notice. It says nothing about validity, and it can be broken entirely on its own, by a company that invites everybody correctly and then gives its claim notice a day early. Reading it as an automatic sanction for breach of a separate obligation in section 78(1) goes beyond what its wording supports.
The Soneji question. The Supreme Court considered the established principles of statutory interpretation. Where legislation provides no express consequence for failing to comply with a statutory requirement, the court must infer what Parliament intended by considering the statutory scheme as a whole and the prejudice (if any) caused by non-compliance.
The purpose of an invitation is to give a leaseholder the chance to join the company before a claim is made. Ms O’Connor was content, and would have had no right to object even had she not been. The freeholder sat outside the class the rule protects and was no worse off. The Court considered that treating every breach as fatal, whatever its gravity, was too blunt an answer to a problem that varies from case to case.
Earlier statements withdrawn. The Court also considered statements made in the judgment in A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd [2024] UKSC 27; [2025] AC 1075 on which the freeholder relied, and described these statements as “incautions statements” and held that those statements did not form part of the binding reasoning of that decision.
Entitlement and procedure. The case could have ended there. Instead the Court set out a general division of the statutory scheme which reaches beyond these facts, and this is the part likely to have the greatest effect on day to day practice.
The Supreme Court distinguished between the substantive requirements (s72-77 and 79(3)-(5)) governing entitlement to acquire the right to manage and the procedural steps (s78-89) required to exercise that right.
It concluded that only objections relating to the substantive entitlement conditions, and not procedural requirements, can be raised as a dispute about entitlement by counter-notice under s84(2)(b) whilst s107 provides an enforcement mechanism for non-compliance with procedural steps.
Where the sanction now sits. The obligation to give notices inviting participation remain, as do other procedural steps. The Supreme Court confirmed that the appropriate remedy for procedural non-compliance is through the discretionary enforcement provisions of section 107, as opposed to automatic invalidation of the claim notice. The Court did not determine the actual application of 107, so the exercise of that discretion in other circumstances remains to be considered on the facts of individual cases.
For freeholders, managing agents and RTM companies alike, the practical point is this: a missed invitation no longer invalidates a claim notice, however the obligation to give one remains and can be enforced through the tribunal.
What this means going forward
For freeholders and managing agents. The judgement makes it particularly important to distinguish between objections concerning the RTM company’s compliance with substantive entitlement conditions and procedural rules, though compliance with both remains important.
We suggest that anyone with a claim currently before the tribunal reviews the grounds pleaded in the counter-notice before the next hearing. A ground that was properly arguable a year ago may no longer be open.
For RTM companies and leaseholders. The statutory procedure must still be followed. RTM companies should take appropriate steps to identify all qualifying tenants, particularly where leases have recently been granted and registration at the Land Registry may be pending (noting that there are significant registration delays at this time). Although a missed invitation may not automatically invalidate a claim notice, the tribunal retains the power to order compliance. In some cases this may result in the process having to be restarted, with the additional delays and costs that would involve.
What the judgement means in practice: The decision essentially removes an important basis on which freeholders could previously challenge RTM claims, but it does not eliminate the need for careful compliance with the statutory procedure.
An RTM company must still identify the qualifying tenants who are entitled to receive invitations to participate, give those invitations, and allow the required period before giving its claim notice.
Where a qualifying tenant is omitted, the consequences will depend on the circumstances and whether the tribunal is asked to exercise its enforcement powers under section 107. Although the Supreme Court has confirmed that an omission will not automatically invalidate a claim notice, serious procedural failures may require corrective action, potentially including restarting the claim process. The position is different where a challenge concerns the RTM company’s underlying entitlement; the statutory eligibility requirements remain essential to establish, and a properly founded challenge to those requirements can still prevent acquisition of the right to manage.
For leaseholders, freeholders and managing agents alike, the judgment reinforces the importance of understanding both the substantive requirements and the procedural steps involved in an RTM claim.
If you are dealing with a right to manage claim or a counter-notice, please get in touch and our team will be happy to help.
Frequently asked questions
Does an RTM company still have to invite qualifying tenants to participate?
Yes. Section 78(1) still requires it, and section 79(2) still requires a 14 day gap before the claim notice is given. What has changed is the consequence of getting it wrong.
Can a leaseholder who was missed still do anything about it?
Yes. A qualifying tenant who should have received a notice inviting participation may seek an order under s107 requiring the RTM company to remedy the failure. Before making an application, notice must be given requiring the default to be remedied, and more than 14 days must pass without the failure being remedied. The tribunal then has discretion to make an order and decide what actions should be required.
Does this cover every notice in the right to manage process?
No. The Supreme Court’s decision concerns the obligation to give notices of invitation to participate under s78(1) and the timing requirement under s79(2) for giving the claim notice thereafter.
Is a leaseholder whose lease has not yet been registered at the Land Registry a qualifying tenant?
Yes, potentially. The Court of Appeal held that a leaseholder tenant under a newly granted long lease may be a qualifying tenant even though registration of that lease at the Land Registry had not yet taken place. It should be remembered that Ms O’Connor was held to be a qualifying tenant on the facts of the case; whether a particular leaseholder tenant is a qualifying tenant in other circumstances will depend on the nature of their interest and the statutory requirements.
