Collective Enfranchisement - Who's company?

Kad_Williams

I and my fellow leaseholders are potentially interested in buying and sharing the freehold of our block of flats from the Local Authority. We've scoped out potential valuers and solicitors to do the essential legal and negotiatory work.

The thing that keeps coming up and giving us pause for thought is the part of the process where we'd have to create a company to manage the freehold. Is it entirely essential to create a new company? Could we transfer the freehold into the ownership of an existing company owned by one of us - particularly if we already have an existing infrastructure to manage that company?

Have any of you pursued collective enfranchisement and how much of an ache has it been for you if at all?

princeofpounds

You could transfer the freehold to an existing company, but it wouldn't be normal.

The whole point is that you will all be shareholders in that company, that the charter and directorships would be drawn up to manage the freehold, and operations and finances are run to that objective as well.

That would be very disruptive - maybe even prohibitive - to an existing company that intends to pursue any other kind of activity. For example, if I was a consultant with my own limited company for personal business purposes, no way would I invite all my neighbours to become directors.

It would also be no less work to change the structure of an existing company to suit this purpose than it would to set up a new company.

So a new company is the normal way to go. Setting it up is not hard and I'd be surprised if your lawyer cannot assist with this.

It is a bit of a paperwork pain to go through the first accounting cycle. But once you have done it, it gets a lot easier on subsequent runs, especially when the purpose of the company doesn't really change much.

You also have to do the work of arranging insurance and maintaining the building, plus admin when people buy and sell into the block. It's not the hardest, but it's not nothing, especially if major works are planned.

davidmcn

Putting the freehold into an existing company owned by one of you means it's then owned by that person - whereas I think what you're wanting to do is jointly own it? Cleanest to form a new company for it.