Offered freehold by landlord.

[Deleted User]

Thanks for the advice anselld..Appreciated.

Have a good evening.

Chris

princeofpounds

Just was thinking I don't feel its fair that 'the 3 residents' stump up the cash and the fourth resident has no funds and also benefits.(although I guess the freehold is an investment hopefully)

Yes you still are a bit confused. If you do it properly, all three of you freehold owners will also be charged the service fee. That money, together with the service fee from the fourth leaseholder, will go into the freehold company.


Because you three own the freehold company, you could then choose to pay the cash out of the company as dividends, right back to yourselves. So you would receive your service charge right back, and a third-share of the fourth leaseholder's payment (they obviously get nothing back).


So your economic incentive, as a group of freehold company owners, will be to not reduce the service charge at all. The fourth leaseholder will not benefit at all. You could even try to increase it...


Now you might start to understand why the previous freeholder appears so 'mean' with their service charge... because they can.


But of course the fourth leaseholder might have wrong expectations that simply because the freehold will be owned by some of the leaseholders they will get a better deal. So to avoid conflict you might just want to keep the service charge the same or give a token cut.


There are tax implications to paying charges and receiving dividends of course, but I suspect (I do not know) that many freehold companies owned by leaseholders do not bother with correct procedures simply to minimise the amount of taxable cash flowing around. Or maybe there are ways of offsetting the profit derived from the service charge. A good accountant would be able to tell you.

[Deleted User]

Thanks 'price of Pounds'.

That explains things a lot better.

Last question is obviously I would like to put an offer in and I have only 6 days left until my 2 months are left.

If the offer goes out and the Landlord refuses the offer and the 2 months run out can he then withdraw his offer?

Obviously I will be seeking legal advice today but I like to know as much as I can about these things as I've found my last solicitor pretty rubbish.

Also setting up a company would be pretty easy I guess.

If you have time to elaborate that would be great.

Thanks in advance.