What it changes, and what it does not
It changes who manages. A company formed by the leaseholders takes over the management functions: repairs, maintenance, insurance arrangements, the service charge and the appointment of any agent.
It does not change who owns. The freeholder remains the freeholder, ground rent remains payable, and the leases stay as they are. Lease extensions still have to be negotiated or claimed in the ordinary way.
That combination is the point. It separates the thing most leaseholders actually want — control of how their building is looked after and what it costs — from the thing that is expensive.
Why it is often the practical answer
Buying the freehold collectively requires enough participating leaseholders and enough money, and on many blocks one or both is missing. The right to manage is a statutory right exercisable without the freeholder's agreement and without paying a premium for the building.
It is also reversible in effect: a block that takes over management and then decides it wants the freehold has lost nothing and has acquired a working company and a track record.
What to establish before you count on it
Whether the building qualifies and whether enough leaseholders are willing. Eligibility turns on the building, the leases and the proportion of leaseholders participating, and it is the first thing a solicitor will assess.
What it would cost. The process has its own costs, and the leaseholders can be liable for some of the freeholder's reasonable costs as well.
Whether anyone else has tried. On a block where an attempt has already failed, the reason it failed is the most useful information available.
If you are buying into a block with a right-to-manage company already in place, ask the ordinary company questions: is it filing its accounts, who are the directors, and does it have any money?