Running an RMC: A New Director's & Flat Buyer's Day-to-Day Guide

Just joined an RMC? Start here

A Residents' Management Company (RMC) is a company that is party to the leases of a building and set up to manage it. GOV.UK describes an RMC as a company which is party to the lease, whose shares are owned by leaseholders, and says RMCs usually have the repairing obligation. The statutory definition is wider: paragraph 9(4) of Schedule 8 to the Building Safety Act 2022, inserted by Section 117(3) of the Leasehold and Freehold Reform Act 2024 and in force from 24 July 2024, covers a body corporate limited by guarantee whose members are the leaseholders, or one where the majority of the shares are held by leaseholders. A guarantee company has members rather than shareholders, so an RMC is not always owned by anybody. It is registered at Companies House and a handful of volunteer leaseholders serve as its directors. The RMC's authority comes from one of two places: the leases themselves (which name it as the party responsible for management) or ownership of the freehold.

If you have just been asked to "join the residents' management company" or have discovered your flat comes with a share in one, this guide explains what you have signed up for - in plain English, with the legal references where they matter. For the full definition and how an RMC compares with the alternatives, see our complete guide to Residents' Management Companies.

How RMCs come to exist

1. Set up by the developer

In many modern developments, the developer creates the RMC at the outset and writes it into every lease as a third party. These are often called tripartite leases: the three parties are the freeholder, the leaseholder, and the RMC. The lease assigns the management obligations - repairing the structure, insuring the building, maintaining common parts, collecting service charges - directly to the RMC. Each purchaser becomes a member on buying their flat - usually via a share or membership transfer that must be registered with the company. Transfers missed at conveyancing are a common RMC problem.

2. Created when leaseholders buy the freehold

When leaseholders club together to buy their building's freehold (known as collective enfranchisement), they normally form a company to hold it. That company - sometimes called a freehold management company or "share of freehold" company - functions as an RMC: it holds the freehold and manages the building, and its members are the leaseholders who took part. Not every leaseholder necessarily takes part, so a share of freehold building does not automatically mean a share for every flat.

What an RMC is not

An RMC is frequently confused with two neighbouring structures, and the distinction matters because the legal rights and duties differ:

• RTM company - a company formed under the Commonhold and Leasehold Reform Act 2002 to take over the management functions under the leases by statutory right, without buying the freehold. Section 96 moves those functions from the landlord and from any management company that is party to the lease, but not functions relating to re-entry or forfeiture. The qualification rules, formation process, and company articles are prescribed by statute. Our step-by-step Right to Manage guide covers the process in full.
• Recognised tenants' association - a group of leaseholders that represents residents' interests but does not manage the building. Section 29 of the Landlord and Tenant Act 1985 defines it as an association of qualifying tenants recognised either by notice in writing given by the landlord to the secretary of the association, or by a certificate: in England from the First-tier Tribunal, in Wales from a member of the local rent assessment committee panel. Recognition is conferred on an association that already exists, it has officers rather than directors, and it carries consultation and information rights under the 1985 Act but no management powers. See our guide to leaseholders' associations.

Day to day, RMC and RTM directors do very similar work - the difference is where their authority comes from. Marklet's RMC overview page and RTM overview page set out how the same tools apply to each.

What the RMC is responsible for

The RMC's obligations come from the lease and from statute. In a typical block they include:

• Repair and maintenance of the structure, roof, common parts, and shared services - to the standard the lease requires, not just when something breaks.
• Buildings insurance - arranging cover for the whole building and, once the relevant Leasehold and Freehold Reform Act 2024 provisions are brought into force, providing greater transparency over commissions.
• Service charge administration - setting budgets, issuing demands, collecting payments, and accounting for the money. Service charges are subject to the Landlord and Tenant Act 1985: they must be reasonably incurred (Section 19), and leaseholders can challenge them at the First-tier Tribunal.
• Statutory consultation - Section 20 does not impose a duty to consult. It limits what each leaseholder can be charged unless the consultation requirements are complied with or dispensed with by the Tribunal. The limits bite where works would cost any leaseholder more than £250, or where a long-term agreement would cost any leaseholder more than £100 in an accounting period.
• Holding service charge money on trust - under Section 42 of the Landlord and Tenant Act 1987, service charge funds belong to the leaseholders collectively and must be held in trust, ideally in a designated client account.
• Building safety - for buildings in England that are at least 18 metres tall or have at least seven storeys and contain at least two residential units (Section 65, Building Safety Act 2022), the Act adds "accountable person" duties; even below that threshold, fire risk assessments and routine compliance checks (lifts, electrical, asbestos, legionella) sit with whoever manages the block.

The RMC can do all of this itself ("self-managing") or appoint a professional managing agent to do it on the company's behalf. Either way, the legal responsibility stays with the RMC - an agent is the company's contractor, not its replacement. If your board employs an agent, our guide on holding your managing agent to account is a good companion to this one.

What RMC directors are personally signed up to

RMC directors are real company directors. The role is voluntary and almost always unpaid, but the duties in the Companies Act 2006 apply in full - acting within powers, promoting the success of the company, exercising independent judgment and reasonable care, and avoiding conflicts of interest. The company must also keep up its Companies House obligations: an annual confirmation statement, annual accounts, and an up-to-date register of members (Section 113, Companies Act 2006). The separate register of directors is gone: Sections 161A to 167F of that Act were omitted on 18 November 2025 by paragraph 2(a) of Schedule 2 to the Economic Crime and Corporate Transparency Act 2023 (SI 2025/1118), and a change of director is instead notified to the registrar within 14 days under Section 167G. For most small RMCs the accounts are micro-entity accounts; dormant accounts are only an option where the company genuinely has no transactions in its own right, and many RMCs that contract with suppliers or collect ground rent do not qualify - confirm the right treatment with your accountant. Since 18 November 2025, Companies House identity verification also applies to every director: new directors must verify their identity before appointment, existing directors confirm verification with the company's next confirmation statement, and an unverified director who continues to act commits an offence.

In practice, the bigger day-to-day exposure is not company law but leasehold law: missed Section 20 consultations that cap recovery at £250 per leaseholder, service charge demands that are not payable because they omit the landlord's name and address (under Sections 47-48, Landlord and Tenant Act 1987 the sums are treated as not due until the missing information is supplied to the leaseholder by notice - these apply where the RMC is itself the landlord, for example because it owns the freehold; a tripartite RMC that is not the landlord falls outside them, though every demand must still include the Section 21B summary of rights under the 1985 Act), or costs challenged at the Tribunal because no one can produce the paper trail. Most RMCs take out directors' and officers' (D&O) insurance precisely because volunteers should not carry that risk personally.

We cover the full list - with a practical annual calendar - in our companion piece, RMC director responsibilities: the complete checklist.

How an RMC actually runs

A well-run RMC tends to have a simple rhythm:

1. An annual general meeting where directors are appointed or re-elected, accounts are presented, and the year's budget and works are discussed.
2. A board that meets regularly - quarterly is common - with minutes, so decisions are recorded and survive director changes.
3. A service charge budget set before the year starts, tracked against actual spend, with variances explained rather than discovered at year end.
4. A single shared record of issues, contractor jobs, invoices, and correspondence - so the company's memory does not live in one director's inbox.

That last point is where most volunteer boards struggle. Email chains, spreadsheets, and WhatsApp groups work until a director moves away, an agent changes, or a leaseholder disputes a charge from three years ago. Our comparison of software, spreadsheets, and portals looks at the options for fixing this.

Common problems RMCs face

• Director burnout and succession - one volunteer does everything until they stop; nothing is documented; the next board starts from zero.
• Agent drift - the managing agent reports little, invoices arrive unitemised, and the board rubber-stamps because it lacks the records to push back.
• Arrears - a few non-paying leaseholders strain cash flow, and the company hesitates to enforce against neighbours.
• Compliance gaps - fire risk assessment actions, electrical condition reports, and lift inspections slip because no one owns the calendar.
• Disputes - service charge challenges at the First-tier Tribunal succeed against the RMC because consultation steps or paperwork were missed, not because the works were wrong.

None of these are character flaws - they are what happens when a volunteer-run company has professional-grade obligations and household-grade tools.

Where to get authoritative help

• The Leasehold Advisory Service (LEASE) - free, government-funded advice for leaseholders and RMC directors
• GOV.UK guidance on flat management companies - Companies House requirements for RMCs and RTM companies
• The Property Institute (TPI) - professional body for managing agents, with advice notes for RMC directors
• Our UK leasehold glossary - plain-English definitions of every term in this article

The bottom line

An RMC puts leaseholders in control of their building - and puts real legal duties on the volunteers who serve as its directors. The companies that run smoothly are not the ones with the most enthusiastic directors; they are the ones with the best records.

Marklet is block management software built for RMC directors - issues, service charges, Section 20 consultations, and every email in one auditable workspace that survives board changes. Get in touch to start on our free plan.