Mind the Gap: What the Court of Appeal decision in Cresta Court and ‘the registration gap’ means for RTM claims
The Court of Appeal’s recent decision in Avon Freeholds Ltd v Cresta Court E RTM Company Ltd [2025] is an important reminder of the need for strict compliance in Right to Manage (RTM) claims. It has implications for leaseholders, landlords, their lawyers, managing agents and other property professionals alike when considering RTM claims.
The background to the case
The matter relates to the Right to Manage under the Commonhold and Leasehold Reform Act 2002 (CLRA).
The right to manage legislation provides a mechanism by which qualifying tenants can acquire the right to take over the management of their block of flat by following a set process, including serving a “claim notice”, however certain strict requirements govern the process, including steps that must be taken before serving the claim notice.
Particularly, section 79(2) of the CLRA states: “the claim notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before”
In the case of Cresta Court, an RTM company failed to serve a Notice of Invitation to Participate on a new leaseholder who had completed their purchase of a flat, but the Land Registry had not yet registered their lease (a common occurrence known as ‘the registration gap’).
The appeal raised two important questions:
- Is the leaseholder owner of a flat with a newly granted long lease, which is not yet registered at the Land Registry, a “qualifying tenant” within the meaning of the CLRA;
- if the answer to the first question is ‘yes, they are a qualifying tenant’, whether the failure to serve them with a notice of invitation to participate invalidated the claim notice which was subsequently served by the RTM Company.
The short answer
On the two questions posed above, the Court of Appeal determined ‘yes’ and ‘yes’; leaseholders who have recently purchased flats, but are waiting for the Land Registry to register their lease (in the “registration gap”), are ‘qualifying tenants’ for the purposes of serving the necessary invitation to participate, and must be served as such before a claim notice can validly be given.
- The leaseholder in question was considered to be a “qualifying tenant” for the purposes of the CLRA;
- Failure to serve a qualifying tenant when sending out the Notices of Invitation to Participate, means a claim notice would not be valid.
Why this matters
The First-tier Tribunal and Upper Tribunal had previously taken a more lenient approach in Cresta Court, but the Court of Appeal held that failure to serve this leaseholder (who they determined to be a qualifying tenant under the CLRA), with a notice of invitation to participate invalidated the RTM Company’s claim notice.
Previous case law suggested that not serving a qualifying tenant might not always be fatal; the Court of Appeal has made clear in the Cresta Court decision that section 79 of the CLRA requires strict compliance: a valid claim notice cannot be given until the necessary qualifying tenants have been served with notices of invitation to participate.
The Court of Appeal decision confirms ‘qualifying tenants’ who must be served with a notice inviting participation also extends also to an equitable tenant of a long lease in the “registration gap” where there is no corresponding legal tenant as a qualifying tenant.
Careful research and consideration will have to be given to establish recently completed transactions and pending applications at the Land Registry in order to correctly identify and serve the necessary ‘qualifying tenants’ with notices of invitation to participate, before progressing to serving a claim notice.
Practical implications
The decision will have implications for those bringing or responding to RTM claims:
- More robust checks will be needed before serving notices of invitation to participate —it is not possible to rely solely on the Land Registry. A lack of openly available public information about pending applications will require more investigation and careful consideration, which may involve writing to conveyancers and others for further information about new leaseholders.
- Buyers in the registration gap must be included—they are qualifying tenants who must be served with notices of invitation to participate before the claim notice can be served.
- Those preparing or investigating RTM claims will need to factor in more time and cost allowances for these steps.
How Moore Barlow can help
Cresta Court reiterates the need for strict compliance with the legislation and expert knowledge of those requirements for a successful RTM Claim. For leaseholders and their representatives, it means more diligence; for landlords it creates clearer grounds to challenge. The safest path is a cautious and diligent one – investigate recent and pending transactions, and treat completed purchasers as qualifying tenants, serve all of them, and avoid fatal defects and invalid claims.
We act for both landlords and leaseholder tenants in connection with RTM claims and will guide you though the process. For more information, speak to one of our Leasehold Enfranchisement lawyers.
