You took on the role to help your building. You didn't sign up for personal legal liability across building safety, service charge law, and Companies Act duties. But that is what you carry. This guide covers what the law actually requires of you.
There are approximately 8,925 RTM companiesAs of early 2026, Companies House records approximately 8,925 active RTM companies registered in England and Wales. Companies House registered in England and Wales. The directors of those companies — typically unpaid leaseholders doing this on top of their day jobs — collectively carry responsibility for their buildings' compliance with legislation that has grown significantly in scope since the Grenfell Tower fireThe Grenfell Tower fire of June 2017 led to the Building Safety Act 2022, the Fire Safety (England) Regulations 2022, and significantly strengthened obligations on building owners and managers. GOV.UK and the Building Safety Act 2022.
Ignorance is not a legal defence. A director who did not know about their s.20 consultationSection 20 of the Landlord and Tenant Act 1985 (as amended by the CLRA 2002) requires landlords and RTM companies to consult leaseholders before qualifying works costing more than £250 per leaseholder or long-term agreements above £100 per year. Failure limits recoverable costs to £250. Legislation.gov.uk obligations can still find service charge demands rendered unenforceable and costs personally irrecoverable.
These duties apply to every director of every private limited company — including RTM and freehold companies. They are personal duties that cannot be contracted out.
| Duty | Source | What it means in practice |
|---|---|---|
| Act within your powers | CA 2006, s.171 | Only take actions the company's articles of association allow. RTM companies have a specific statutory purpose — managing the building — and cannot act outside it. |
| Promote the success of the company | CA 2006, s.172 | Act in good faith in the interests of all members (leaseholders). Decisions that benefit some leaseholders at the expense of others may breach this duty. |
| Exercise independent judgement | CA 2006, s.173 | You remain personally responsible for decisions even when you rely on advisers. Delegating to a managing agent does not transfer your responsibility. |
| Exercise reasonable care, skill and diligence | CA 2006, s.174 | You are expected to apply the care and skill that a reasonably diligent person with your knowledge would apply. Not knowing about a legal obligation can still constitute a breach. |
| Avoid conflicts of interest | CA 2006, s.175 | If you or a connected person benefits from a decision (e.g. awarding a contract to a relative's business), this must be declared and managed carefully. |
| File accounts and confirmation statement | CA 2006, s.394–396, s.853 | Annual accounts and confirmation statement must be filed at Companies House on time every year. Late filing triggers automatic financial penalties. Persistent failure can result in the company being struck off. |
These are the core compliance obligations that BLOCK-iQ tracks for RTM and SoF buildings. Red = immediate safety/legal risk. Amber = significant financial or legal risk. Green = ongoing statutory requirement.
This is a guide only, not legal advice. Obligations vary by building type, height, and lease terms. Always seek professional advice for your specific situation.
Most directors are managing these obligations across spreadsheets, email threads, and calendar reminders. BLOCK-iQ replaces that with a single compliance dashboard — every obligation, every deadline, every document in one place. Built by a director, for directors.
Yes, in certain circumstances. The RTM company's limited liability does not protect directors who personally breach their statutory duties under the Companies Act 2006, or where health and safety failings lead to prosecution. Service charge procedural failures — such as missing the s.21B summary of rights — can render demands unenforceable, leaving the company and its directors exposed. Directors and officers insurance (D&O) is strongly recommended for all RTM and freehold company directors.
An RTM company takes over management of a building without purchasing the freehold — the landlord retains ownership. A share of freehold means leaseholders collectively own the freehold, usually through a freehold company. In both cases, the directors carry similar compliance obligations. The key difference is that SoF directors are also the freeholders, which adds obligations around ground rent, lease extensions, and enfranchisement that RTM directors do not have.
Yes. All private limited companies must file annual accounts and a confirmation statement regardless of whether they are trading, dormant, or making a profit. Dormant companies can file simplified accounts, but the filing obligation remains. Failure to file results in automatic financial penalties and, if persistent, the company being struck off the register — which can mean the RTM ceases to exist and management reverts to the landlord.
If qualifying works are carried out without completing the three-stage s.20 consultation, the amount recoverable from each leaseholder through service charge is capped at £250 — regardless of how much the works actually cost. For a 16-unit building spending £80,000 on works, this could mean you can only recover £4,000 from leaseholders rather than £80,000. The RTM company would be liable for the shortfall. Emergency works are exempt if a dispensation application is made to the First-tier Tribunal.