Who Is Responsible for What? Understanding the Roles of the Freeholder, RTM Company and Managing Agent

Residential block management becomes considerably easier when everybody understands where responsibility sits.

In many leasehold buildings, however, ownership, decision-making and day-to-day management do not all sit with the same party. A freeholder may own the building, an RTM company may have acquired responsibility for many of its management functions, and a professional managing agent may be carrying out the practical work on behalf of the RTM company.

When those roles are not clearly understood, problems follow.

Leaseholders may approach the wrong party for consent. Directors can find themselves drawn into operational matters that should be handled by their managing agent. Managing agents may wait for decisions that only the board can make. Important maintenance or compliance matters can become delayed because everyone assumes somebody else is responsible.

The solution begins with understanding the structure.

The Lease Still Sits at the Centre

Before considering the individual parties, there is one principle that applies to almost every leasehold building: the lease is fundamental.

It establishes the contractual relationship between the landlord and leaseholder and usually sets out who is responsible for repairing different parts of the building, maintaining communal areas, arranging insurance, recovering service charges and providing various services.

The introduction of a Right to Manage company does not make the lease irrelevant. Instead, certain management functions that would otherwise be exercised by the landlord transfer to the RTM company.

Government guidance describes Right to Manage as allowing qualifying leaseholders to take over management of their building without having to acquire the freehold. Where an RTM claim succeeds, the landlord continues to own the building while the RTM company takes responsibility for management functions including service charges, communal areas and building maintenance.

That distinction between ownership and management is central to understanding who does what.

What Is the Freeholder Responsible For?

The freeholder owns the freehold interest in the building.

That ownership does not automatically mean the freeholder manages every aspect of the property. In a traditionally managed leasehold building, the freeholder or another landlord may retain significant management responsibilities under the leases. Where leaseholders have successfully acquired the Right to Manage, many of those management functions transfer to the RTM company.

The freeholder nevertheless remains an important party.

They retain their underlying ownership interest and may retain rights and responsibilities that have not transferred to the RTM company. Certain lease consents and property decisions may continue to involve the freeholder, depending on the lease and the nature of the proposed action.

For example, an RTM company must notify the landlord before granting certain approvals, and landlord consent may continue to be relevant for particular structural alterations or changes of use where the lease requires it.

This is why it is inaccurate to assume that acquiring Right to Manage removes the freeholder entirely from the building's management structure.

It changes the allocation of management functions. It does not transfer ownership of the freehold.

What Does the RTM Company Take Responsibility For?

A Right to Manage company allows qualifying leaseholders collectively to take over specified management functions without purchasing the freehold and without having to prove that the existing management has been poor.

Once the RTM has been acquired, the company generally becomes responsible for management functions under the leases relating to matters such as services, repairs, maintenance, improvements, insurance and wider management, subject to the statutory framework and any functions that remain outside the RTM.

That can place a substantial responsibility on the directors.

The RTM company may need to oversee service charge budgets, maintenance decisions, contractors, compliance activity, insurance arrangements, major works and communication with leaseholders.

It can undertake those responsibilities directly.

It can also appoint a professional managing agent to carry out the operational work on its behalf. Government guidance expressly recognises that an RTM company can manage the building itself or appoint a managing agent.

This is where an important distinction arises.

Delegating management is not the same as abandoning governance.

The directors remain responsible for running the RTM company and making the decisions that properly sit with the board. Appointing an agent should reduce their operational workload, but directors should still retain appropriate oversight of finances, major decisions, risks and the performance of the appointed agent.

RTM directors are also company directors. They therefore have responsibilities associated with running the company itself, including the relevant corporate filing and governance requirements.

What Is the Managing Agent Responsible For?

The managing agent is the professional organisation appointed to carry out agreed management services for the client.

The client may be an RTM company, resident management company, freeholder or another landlord depending on the building's structure.

The managing agent's role should be defined through a management agreement.

For tlc Estate Agents, that structure includes areas such as service charge administration, financial reporting, repairs and maintenance, contractor management, compliance coordination, insurance administration, routine building oversight and major works support.

Crucially, the managing agent is not simply given unrestricted authority to do whatever it considers appropriate.

A properly structured management relationship establishes what the agent can deal with independently, where expenditure limits apply, which matters require board approval and when specialist professional advice should be sought.

Under tlc Estate Agents' management agreement, for example, the Manager acts within the agreed services and authority provided by the Client. Expenditure within an approved budget can be administered under that authority, while material changes and certain expenditure or decisions require Client approval. The agreement also requires the Manager to comply with the lease, applicable law and relevant professional standards while keeping the Client appropriately informed.

That creates a much healthier relationship than either extreme: directors attempting to manage every repair personally, or an agent operating without meaningful governance.

Who Makes the Decision?

The exact answer will always depend on the lease and management arrangements, but the distinction can often be understood like this:

Situation	Typical management position
Routine communal repair	Managing agent coordinates within its delegated authority
Annual service charge budget	Managing agent prepares and recommends; client/board provides the appropriate approval
Contractor appointment	Managing agent handles procurement and management within agreed authority
Significant unbudgeted expenditure	Usually requires appropriate client or board approval, subject to emergency provisions
Major works	RTM/client makes the relevant decisions; managing agent coordinates process, contractors and consultation with professional advisers where required
Day-to-day resident enquiry	Managing agent handles operational communication
RTM company governance	RTM directors remain responsible
Sale of the freehold	Freeholder matter, not a managing agent decision
Lease variation	Depends on the lease and parties involved; specialist legal advice may be required
Structural alteration consent	Depends on the lease and RTM arrangements; the landlord may retain relevant rights or need to be notified

The purpose of this structure is not to make directors less informed.

It is to ensure they are involved at the right level.

Where Responsibility Commonly Becomes Blurred

Problems usually arise when governance and operational management begin to overlap.

An RTM director notices poor cleaning and starts instructing the cleaner personally. Another director asks a contractor to undertake additional work without notifying the managing agent. A leaseholder approaches the managing agent for consent to structural alterations when the lease requires involvement from another party. Meanwhile, the managing agent sends every minor operational decision back to the board.

The result is fragmented management.

Contractors receive conflicting instructions. Responsibility becomes difficult to establish. Costs are harder to control. Directors become overwhelmed with correspondence.

A professional management structure should do the opposite.

The board should establish strategy, provide the approvals properly required from it and retain sufficient oversight to understand the building's financial and operational position.

The managing agent should turn those decisions into organised execution.

That principle is reflected in tlc Estate Agents' own management arrangements, which require the client to cooperate with the Manager and provide timely instructions while directing onsite personnel through the Manager rather than creating parallel lines of instruction.

The Managing Agent Should Create Distance From Day-to-Day Problems

For many RTM directors, becoming a director was not intended to become a second occupation.

They may have agreed to join the board because they care about the condition of the building and how money is spent. That does not mean they should personally coordinate plumbers, review cleaning rotas or answer every resident maintenance email.

The purpose of professional Block Management is to create the operational infrastructure between the directors and the day-to-day demands of the building.

At tlc Estate Agents, that includes coordinating maintenance and contractors, administering service charge processes, providing financial reporting, supporting compliance activity and working with professional advisers where specialist expertise is required. The objective is to give directors clearer oversight while reducing unnecessary operational involvement.

This does not remove the board from decision-making.

It allows the board to concentrate on decisions rather than administration.

Good Management Depends on Clear Authority

The strongest residential management structures usually have one thing in common: responsibility can be identified quickly.

There should be clarity around which decisions the managing agent can make, the agreed expenditure authority, what requires director approval and which issues need referral to the freeholder, solicitor, surveyor or another specialist.

When something goes wrong, nobody should need several days of emails to establish who is responsible for dealing with it.

The managing agent should understand its authority. Directors should understand the matters reserved for them. Leaseholders should know where enquiries should be directed. Contractors should receive instructions through a controlled channel.

That structure reduces duplication and helps prevent decisions from being delayed.

Ownership, Governance and Delivery Are Different Responsibilities

A useful way to think about the relationship is that the freeholder, RTM company and managing agent perform different functions within the same building.

The freeholder retains the underlying freehold interest.

The RTM company takes control of qualifying management functions.

The managing agent delivers the agreed operational management on behalf of its client.

Each is important, but they are not interchangeable.

For RTM directors in particular, appointing an experienced managing agent should mean that responsibility is structured rather than absorbed personally. Directors retain appropriate control and oversight, while an experienced management team coordinates the operational, financial and compliance requirements of the building.

That is the distinction between simply having a managing agent and having a properly managed building.

If you are unsure whether responsibilities within your building are clearly defined, tlc Estate Agents provides structured, compliance-led Block Management for freeholders, RTM companies and resident management companies across Kensington and Chelsea.

A confidential review of the existing management structure can help identify where responsibilities, authority or reporting arrangements require greater clarity.

This article provides general information only. Lease provisions, ownership structures and statutory responsibilities differ between buildings, and specialist legal or professional advice should be obtained where required.

Frequently Asked Questions

Does an RTM company become the freeholder?

No. Acquiring the Right to Manage transfers qualifying management functions rather than ownership of the freehold. The freeholder continues to own the freehold interest in the building.

Can an RTM company appoint a managing agent?

Yes. An RTM company can manage the building itself or appoint a professional managing agent to carry out management functions on its behalf.

Does appointing a managing agent remove responsibility from RTM directors?

Not entirely. The managing agent carries out the services and exercises the authority delegated to it, but directors continue to have responsibility for the governance of the RTM company and for decisions that remain with the board. The division of responsibilities should be clearly documented in the management agreement.

Who is responsible for repairs in an RTM building?

This depends on the lease, the statutory RTM framework and the part of the property concerned. Many repair and maintenance management functions transfer to the RTM company, which can then appoint a managing agent to coordinate them. The precise position should always be checked against the building's leases.

Can the managing agent approve expenditure without the directors?

It depends on the authority granted under the management agreement. A managing agent will commonly have authority to administer approved budget expenditure and deal with routine matters within agreed limits, while significant or unbudgeted expenditure may require client approval. Emergency provisions may also permit urgent protective action where waiting for approval would be inappropriate.

Who should leaseholders contact about everyday building issues?

Where a professional managing agent has been appointed, everyday operational matters such as communal repairs, cleaning issues and routine building enquiries should generally be directed through the managing agent's agreed communication channels rather than individual directors.

Is an RTM company the same as a Resident Management Company?

No. An RTM company is created specifically to acquire management functions under the statutory Right to Manage process. A Resident Management Company normally derives its role from the leases and the particular ownership or management structure of the building. The distinction can be important when determining responsibilities and authority.

Samantha Hossack

Chief Operating Officer

Samantha Hossack, Chief Operating Officer with over 20 years of experience driving operational excellence, leading high-performing teams, and delivering strategic growth across the prime London property market.

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