The Supreme Court handed down judgment in Avon Freeholds Limited (Respondent) v Cresta Court E RTM Company Limited (Appellant) (UKSC/2025/0170) [2026] UKSC 31 at the end of August, clarifying that the failure by an RTM company to serve a participation notice did not invalidate its claim notice or defeat its claim to acquire the right to manage.

In unanimously allowing the appeal, the Supreme Court clarified the consequences of failing to comply with the notice rules set out in the Commonhold and Leasehold Reform Act 2002 (“CLRA”).

Background

The CLRA allows qualifying tenants living in a block of flats to acquire the right to manage their building through the formation of an RTM company, setting out a procedure regulating the acquisition of the right to manage.

Under this procedure, an RTM company can claim the right to manage by serving a claim notice, but there is also a requirement that at least 14 days before serving a claim notice, the RTM company must give a participation notice to anyone who is, at that time, a qualifying tenant of a flat within the premises but is neither a member of the RTM company nor has agreed to become a member.

The appellant, Cresta Court E RTM Company Limited (“Cresta Court Co”), was formed to acquire the right to manage a self-contained part of a block of flats at Cresta Court, Hanger Lane, London W5 (Flats 7 to 26). The respondent, Avon Freeholds Limited (“Avon Freeholds”), was the registered freeholder of the property.

The claim notice covered Flats 7 to 26 and was served by Cresta Court Co on 21 January 2022. The tenant of Flat 17, Ms O’Connor, however, was not given a participation notice because her leasehold title was not registered at HM Land Registry until after the claim notice was served. She held the flat under a 150-year lease granted directly to her by Avon Freeholds from 1 January 2015, which was subsequently registered, with the registration backdated to 15 July 2021. Although she held a long lease and was neither a member of, nor had agreed to become a member of, the RTM company, she would not have objected to a notice had she received one.

It was Avon Freeholds’ position that this meant the claim notice was invalid because Cresta Court Co had failed to give Ms O’Connor a participation notice. It applied to the First-tier Tribunal (Property Chamber) under section 84(3) of the CLRA, seeking a determination that it was not entitled to acquire the right to manage the premises. The First-tier Tribunal upheld the validity of the claim notice.

Avon Freeholds subsequently appealed to the Upper Tribunal. The Upper Tribunal held that Ms O’Connor was a qualifying tenant, but that the failure to give her a participation notice did not invalidate the claim notice.

Avon Freeholds appealed to the Court of Appeal. The Court of Appeal upheld the finding that Ms O’Connor was a qualifying tenant but allowed Avon Freeholds’ appeal on the basis that the failure to give her a participation notice did invalidate the claim notice.

Cresta Court Co appealed to the Supreme Court, which allowed the appeal and held that the failure to serve a participation notice on Ms O’Connor did not invalidate the claim notice.

The issue

The principal issue was whether a freeholder may rely on non-compliance with this requirement to defeat an RTM claim where the RTM company otherwise satisfies the statutory conditions entitling it to acquire the right to manage.

Why did the Supreme Court rule this way?

The court held that the participation notice requirement was procedural, not a condition determining the validity of the RTM claim. As Ms O’Connor suffered no prejudice from not receiving the notice, the omission did not invalidate the claim or deprive the RTM company of its statutory right to manage.

If you require advice on how these changes may affect your property portfolio or enforcement strategy, please contact the Ortolan Legal team.