Setting up the right to manage
Transfer of funds
The landlord must transfer any unspent service charges to the right to manage company. This includes service charges that have been collected in advance and not yet spent, and any reserve fund or sinking fund. The company will need this money to continue to provide services to manage the building.
The landlord must pay the sums on the date the company takes over (acquisition date), or as soon after that date as is reasonably practicable.
The amount to be paid is the sum of:
- monies paid by leaseholders as service charges; plus
- monies invested from service charge payments (and any interest); less
- the landlord’s outgoings on providing services up to the acquisition date
Agreeing the amount
It can be difficult to agree what the sum should be, as accounts are not always up to date.
If there is a disagreement about the amount then it may be a good idea for the right to manage company and the landlord to agree to an external audit of the service charge accounts, with the right to manage company covering the costs of this. This will make sure the amount transferred is fair. It will also give independent evidence to show a managing agent acting for the landlord how much to pay.
It’s usually best to try to reach agreement with the landlord, but if there is a dispute, it’s possible to apply to the tribunal to determine the amount.
You apply by submitting an application form:
- in England – application form Leasehold 8
- in Wales – application form LVT1
What to do if the transfer is delayed
The right to manage company may be in a difficult position if the transfer of funds is delayed, as it will need money for managing the building.
The company could cover a delay by making arrangements such as the leaseholders paying a contribution. Or the landlord may be willing to pay part of the money, before the final amount is agreed.
If the landlord does not transfer the funds, the right to manage company can serve a default notice, and then apply to the county court if the landlord has still not complied after 14 days. The court can enforce the landlord’s obligations.
- Last updated:
- 16 December 2025
- Next review:
- 16 December 2027
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