Right to Manage: Supreme Court clarifies the consequences of procedural non-compliance: Avon Freeholds Ltd v Cresta Court E RTM Company Ltd [2026]

The Supreme Court has delivered an important judgment concerning the statutory right to manage (RTM), clarifying the circumstances in which a failure to comply with the procedural requirements of the Commonhold and Leasehold Reform Act 2002 may invalidate an RTM claim.

The decision (Avon Freeholds Ltd v Cresta Court E RTM Company Ltd [2026]) is relevant to both leaseholders seeking to acquire the management of their building and freeholders or other landlords responding to such claims.

The Court distinguished between the substantive conditions which determine whether an RTM company is entitled to acquire the RTM and the procedural requirements governing the exercise of that right.

Whilst the substantive conditions must be satisfied, a failure to comply with a procedural requirement will not ordinarily invalidate an otherwise valid claim. The consequences of non-compliance will depend upon the nature and purpose of the requirement and the circumstances in which the objection is raised.

The judgment provides important guidance for those preparing RTM claims and those advising landlords on whether there are grounds to challenge them.

The background

The case concerned Cresta Court, a residential building in Hanger Lane, London, comprising 20 flats.

An RTM company had been formed to acquire the RTM the building under the Commonhold and Leasehold Reform Act 2002.

As part of the statutory process, an RTM company must serve notices of invitation to participate on qualifying tenants who are not already members of the company or who have not agreed to become members.

The purpose of this requirement is to give qualifying tenants the opportunity to participate in the proposed acquisition and become involved in the management of their building.

In this case, one qualifying tenant, Ms O'Connor, had not received a notice of invitation to participate.

Her leasehold title had not been registered at HM Land Registry when the RTM company prepared its claim. Nevertheless, she was a qualifying tenant by virtue of her equitable title and should have been invited to participate.

The RTM company served its claim notice on 21 January 2022. Five days later, Ms O'Connor joined the company and supported the proposed acquisition.

The freeholder, Avon Freeholds Limited, challenged the claim on the basis that the failure to serve the notice of invitation to participate rendered the claim notice invalid.

The First-tier Tribunal and Upper Tribunal rejected the freeholder's objection. The Court of Appeal subsequently found in the freeholder's favour on the basis of strict procedural compliance. As the wording of the 2002 Act was unambiguous, there was no reason to take such a flexible statutory interpretation.

The Court stated this in no uncertain terms at [77]: “the court or tribunal would be overstepping its constitutional boundaries if it attempted to substitute for the language of Parliament an interpretation which in its view would produce a more reasonable result on the facts of the individual case before it”. Nevertheless, the RTM company appealed to the Supreme Court, which unanimously allowed its appeal.

What did the Supreme Court decide?

The Supreme Court considered the relationship between the substantive eligibility requirements governing the RTM on one hand, and the procedural requirements which must be followed when exercising that right on the other.

The 2002 Act imposes a number of eligibility conditions, including requirements concerning the nature of the premises, the qualifying tenants and the membership of the RTM company.

Those conditions determine whether the company is entitled to acquire the RTM.

Separately, as a matter of procedure rather than eligibility, sections 78 and 79 require the company to invite qualifying tenants to participate and to allow at least 14 days before serving its claim notice.

The Court held that a failure to comply with those procedural requirements did not, in the circumstances of this case, invalidate the claim.

The requirement to serve notices of invitation to participate is intended to protect the interests of qualifying tenants by ensuring that they have the opportunity to become involved in the RTM company.

Here, the tenant who had not received the notice supported the proposed acquisition and subsequently joined the company.

The freeholder was thereby seeking to rely upon a failure to comply with a procedural requirement intended to protect the interests of another party.

The Supreme Court held that this procedural failure did not provide the freeholder with grounds to defeat the claim in those circumstances.

Otherwise, the procedural rule “would (as here) enable persons to defeat the transfer of the RTM who were not within the class of those intended to be benefited in any way by compliance with the procedural rule alleged to have been infringed... That outcome seems at variance with reasonable notions of fairness or justice, and also therefore unlikely to have been intended” by Parliament (42]).

Can procedural non-compliance still invalidate an RTM claim?

The judgment does not mean that RTM companies can disregard the statutory procedure or that landlords are prevented from challenging claims where procedural requirements have not been satisfied.

The Court recognised that procedural non-compliance may have consequences in particular circumstances.

For example, a failure to serve a notice of invitation to participate could deprive a qualifying tenant of the opportunity to become a member of the RTM company or to raise a substantive objection to the proposed acquisition.

The position may be different where the person raising the objection is sufficiently connected with the procedural failure or has been materially affected by it.

The Court also recognised that section 107 of the 2002 Act provides a mechanism for an interested person to seek an enforcement order requiring compliance with the statutory requirements.

In an appropriate case, this could require an RTM company to take further steps to comply with the statutory procedure before proceeding with its claim.

The distinction is therefore between identifying a procedural failure and establishing that the failure has consequences which justify preventing the acquisition of the right to manage.

Whether a particular failure is capable of invalidating a claim will depend upon the relevant statutory provision, its purpose and the circumstances of the case.

What does this mean for RTM companies and leaseholders?

For RTM companies, the decision provides greater certainty concerning the consequences of procedural errors.

The process of establishing an RTM company and preparing a claim can involve identifying a substantial number of qualifying tenants, checking leasehold titles, establishing the necessary membership and ensuring that the statutory notices are served correctly.

Particular difficulties can arise where leasehold interests have been transferred but the relevant registrations have not been completed (as in Avon Freeholds), or where the information available concerning ownership is incomplete.

The Supreme Court has confirmed that an inadvertent failure to comply with a procedural requirement will not ordinarily invalidate a claim where the substantive conditions governing entitlement have been satisfied.

However, RTM companies should continue to take care to comply with the statutory requirements from the outset.

A procedural failure may still give rise to an application for an enforcement order, delay the acquisition process or result in a dispute concerning the validity of the claim.

The judgment should therefore not be regarded as removing the need for proper preparation and compliance with the statutory process.

What does this mean for freeholders and landlords?

For freeholders and other landlords receiving RTM claims, the decision clarifies the distinction between objections concerning the RTM company's substantive entitlement and objections based upon procedural non-compliance.

A landlord responding to a claim should continue to examine whether the statutory conditions for acquiring the right to manage have been satisfied. These include the eligibility of the premises, the status of the qualifying tenants and the membership requirements applicable to the RTM company.

Where those substantive conditions have not been satisfied, the landlord may have grounds to dispute the company's entitlement.

Procedural objections require separate consideration.

The Supreme Court has made clear that the mere identification of a procedural defect will not ordinarily be sufficient to defeat an otherwise valid claim.

It will be necessary to consider the purpose of the requirement, the nature of the non-compliance and whether the circumstances provide a proper basis for challenging the acquisition.

Where a procedural failure has affected the rights of a qualifying tenant or another interested person, it may be appropriate to consider whether an enforcement order or another remedy is available.

The judgment therefore provides a clearer framework for assessing the merits of a proposed challenge and determining how a landlord should respond to a claim notice.

It also reinforces the importance of distinguishing between substantive objections to entitlement and procedural issues which may be capable of being remedied without invalidating the claim.

Could the decision affect collective enfranchisement claims?

Although the judgment concerned the RTM under the Commonhold and Leasehold Reform Act 2002, its reasoning may have implications for other statutory property rights, including collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993.

Both regimes involve the exercise of statutory rights through prescribed procedures, including eligibility requirements, service of notices and opportunities for landlords to challenge claims.

However, the statutory provisions governing collective enfranchisement differ from those governing the RTM.

The Supreme Court's decision should not therefore be interpreted as establishing that procedural failures in collective enfranchisement claims will necessarily be treated in the same way.

The consequences of non-compliance must be considered by reference to the wording and purpose of the particular statutory provision.

Nevertheless, the distinction drawn by the Supreme Court between substantive entitlement and procedural compliance may be relevant when considering the consequences of defects in claims under other statutory leasehold regimes.

This is an area in which the judgment may provide useful guidance for both landlords and leaseholders when assessing the validity of statutory claims.

Practical implications

In my experience of acting for both freeholders and leaseholders in RTM and collective enfranchisement matters, disputes concerning the validity of statutory claims frequently involve questions about whether the prescribed procedure has been followed correctly.

The Supreme Court's judgment provides important clarification of how those questions should be approached.

For RTM companies, it reinforces the importance of satisfying the substantive eligibility requirements and following the statutory procedure, whilst clarifying that procedural non-compliance will not automatically invalidate an otherwise valid claim.

For freeholders and landlords, it provides guidance on the circumstances in which procedural objections may properly be raised and the distinction between those objections and challenges to the company's substantive entitlement.

For both parties, the practical consequence is that the validity of an RTM claim should be assessed by reference to the particular statutory requirements and the circumstances of the alleged non-compliance, rather than on the assumption that every procedural error necessarily invalidates the claim.

The central principle established by the judgment is that procedural non-compliance will not ordinarily defeat an RTM claim where the substantive conditions governing entitlement have been satisfied.

The decision provides a clearer basis for preparing, responding to and, where appropriate, challenging RTM claims.

Mark Vinall

Partner | Ashley Wilson Solicitors LLP

Ashley Wilson Solicitors LLP advises freeholders, landlords and leaseholders on RTM claims, collective enfranchisement, lease extensions and other leasehold property matters.