Welcome clarity provided by the Court of Appeal in respect of Right to Manage qualification:  Avon Freeholds Limited -v- Cresta Court E RTM Company Limited [2025] EWCA Civ 1016.

In a unanimous judgment handed down on 30 July 2025 the Court of Appeal considered two fundamental issues relating to RTM qualification.

In brief summary of the facts, an RTM company failed to serve a notice of intention to participate (“NIP”) upon a lessee who had completed her purchase of a flat but, had yet to have it registered at HM Land Registry before it served its claim notice upon the landlord.

The first issue concerned whether an unregistered lessee holding an equitable lease but not the legal title to a new long lease was a “qualifying tenant” within the meaning of CLRA 2002.

In this case, there had been a considerable delay in the lessee’s new lease being registered at HM Land Registry as the legal owner. Registration gaps such as occurred here are not uncommon at present and the Court of Appeal provided welcome clarity with confirmation that a tenant with a mere equitable lease would constitute a qualifying tenant within the meaning of CLRA 2002 whilst registration was pending in circumstances where it was a newly granted lease. 

Where it was not a newly granted lease and there was already a legal lease in existence which was being assigned however, the legal owner as registered at HM Land Registry would be the qualifying tenant. 

The second question determined by the Court of Appeal concerned whether the RTM Company’s failure to serve a qualifying tenant invalidated the claim notice served by the RTM Company upon the landlord.  This question is also of fundamental importance to practitioners.

The Upper Tribunal in the decision appealed to the Court of Appeal had determined that the claim notice would not be invalidated by the RTM Company’s failure to serve the qualifying tenant with a NIP.

The Court of Appeal overturned the Upper Tribunal’s decision in this regard and re-confirmed what the position had been known to be prior to the Upper Tribunal’s decision that proper service of the NIPs on all qualifying tenants was a pre-condition to a valid claim by the RTM company.  The Court of Appeal confirmed that the Upper Tribunal had incorrectly interpreted the Supreme Court’s decision in A1 Properties (Sunderland) Limited -v- Tudor Studios RTM Company Limited [2024] UKSC 27.  The consequence of not serving a valid NIP on all of the qualifying tenants was perfectly clear from the statute (Section 79 provides the claim notice “may not be given” unless each qualifying tenant has been served within a specified time period) and accordingly the door was not opened for an analysis of prejudice under R -v- Soneji [2006] 1 AC 340.

The Court of Appeal’s decision provides valuable lucidity for landlords and RTM companies alike and highlights the importance of a thorough analysis and collation of information at the outset of the RTM process to ensure its validity.

If you have any questions about this decision or need expert advice on Right to Manage or property disputes, contact Neil Curbison, Head of the Property Litigation team at Colman Coyle.