Freeholder Compulsory Strike-Off

RPF1992

Hi All, 

I noticed that our freeholder is currently undergoing a compulsory strike-off with companies house. What does this mean for leaseholders!?

If anyone has any information or advice, it would be really great to put us all at ease! 

Thanks,

R

TripleH

If the company is struck off then the freehold would become property of the Crown.

They will be the people you pay your ground rent to.

It might be a good opportunity to get together and buy your freehold if this happens.

I'd be focused more on ensuring you are insured and where service charges and any surplus funds are held.

anselld

Usually it is just a warning shot that some submission to Co House is late and when they get the notice they will pull the finger out and things will continue as normal.

RPF1992

TripleH said:

If the company is struck off then the freehold would become property of the Crown.

They will be the people you pay your ground rent to.

It might be a good opportunity to get together and buy your freehold if this happens.

I'd be focused more on ensuring you are insured and where service charges and any surplus funds are held.

Thanks Triple H... Ensuring we are insured? Have have the normal buildings and contents insurances but is there something else we should be looking at, to cover ourselves? 

Unfortunately, living in London, I don't think we'd have the funds to pull together to afford the lease on this place!

Thanks for the information.

TripleH

Sorry, by insurance its your building insurance. I don't know if your management company (who handies service charges) is competent or not so I'd  be a little cautious in case they aren't.

About 15 years ago I know it cost £40,000 to buy the freehold for a block of 4 flats plus commercial unit just on the Thames in zone 2.

If the Crown, become owners you might be able to strike a deal as its money for them for little effort plus chance for a good statutory lease increase.

Remember if freehold company gets struck off let the managing company know, as you don't want to pay ground rent to the wrong company only to be chased for arrears later. The freeholders bank account should be closed if struck off but this doesn't always happen.

I think it's 3 months from 1st gazette for strike off to the company being closed so remember to check back when you think it will be closed (this can take longer though).

user1977

RPF1992 said:

TripleH said:

If the company is struck off then the freehold would become property of the Crown.

They will be the people you pay your ground rent to.

It might be a good opportunity to get together and buy your freehold if this happens.

I'd be focused more on ensuring you are insured and where service charges and any surplus funds are held.

Thanks Triple H... Ensuring we are insured? Have have the normal buildings and contents insurances but is there something else we should be looking at, to cover ourselves? 

No, they mean buildings insurance - if your lease requires the freeholder to arrange that.

We don't know what your lease says (do you?) so what is your freeholder meant to do? Insure? (guess not if you arrange your own already) Maintenance? Respond to your requests for consent to do things? None of that is going to happen if the company is dissolved.

eddddy

What kind of property do you have - a house or a flat?

The situation is probably worse, if you have a flat.

What do you know about the freehold company? Who owns it? It there a management company?

RPF1992

eddddy said:

What kind of property do you have - a house or a flat?

The situation is probably worse, if you have a flat.

What do you know about the freehold company? Who owns it? It there a management company?

We do have a flat. 
The freehold company are a pair of local businessman and have quite frankly been AWFUL since day one. They are the owners and freeholders, both companies - their construction company who built the development and the business they started to own the freehold, are both going through compulsory strike-offs... 

Fortunately we have a management company who are decent and manage all of the finances on behalf of the freeholder. However, the freeholder recently started the process of removing the managing agents and proposed to take over the management of the property themselves... something isn't right! 

eddddy

RPF1992 said:

We do have a flat. 

So it's not good if company is struck-off. Ownership of the building passes to the Crown, but they won't be bound by the lease and you won't have the protection of the Leasehold Reform Act or Landlord and Tenant Act. 

So insurance, repairs and maintenance etc will probably become an issue.  (Assuming the Freeholder is responsible for arranging buildings insurance, the Crown won't do that.)

And you might have trouble selling, as potential mortgage lenders might not be happy.

But hopefully, it's just a 'lazy' freehold company who haven't filled in some forms - and they'll get it sorted.


More generally,  the leaseholders can consider taking over management of the building themselves. As I said in another thread:

eddddy said:

Right to Manage
Set up a "Right to Manage" company which is controlled by the leaseholders. Then the RTM company can hire their own choice of management company, and the management company would take their instructions from the RTM company (i.e. the leaseholders).
See: https://www.lease-advice.org/advice-guide/right-manage/


Appoint a Manager
Apply to the tribunal to have a manager appointed. You will need to show grounds for this (i.e. evidence of wrong doing by the management company.)
See: https://www.lease-advice.org/advice-guide/what-does-appointing-a-manager-mean/


Buy the Freehold (Collective Enfranchisement)
The leaseholders jointly buy the freehold - that usually means they take over management responsibilities as well.
See: https://www.lease-advice.org/advice-guide/ce-getting-started/

TripleH

@Edddy if a management company is in place would it be that the ownership of the freehold passes to the Crown only but the management company will continue the day to day duties?

I accept I might be wrong but would it not be the same as me owning the freehold title but now you do so you get the ground rent?

I know about the strike off of companies and know that you can buy such assets from the Crown or reopen companies (painful process) I admit my knowledge of freeholds in this scenario is nil.

eddddy

TripleH said:

@Edddy if a management company is in place would it be that the ownership of the freehold passes to the Crown only but the management company will continue the day to day duties?

Usually, the freeholder employs the management company - as their agent.  The management company do all the stuff that the freeholder is supposed to do: insure the building, do repairs, collect service charges, etc

So if the Crown becomes the freeholder, the Crown would need to employ the management company as their agent - and the Crown doesn't do that kind of thing.

So the management company would have no authority to 'manage the building' and in particular they'd have no authority to collect service charges.


But there are exceptions to the above, for example:

• A tripartite lease - where there a 3 parties to the lease: Freeholder, Leaseholder and Management company. (Whereas most leases only have 2 parties: Freeholder and leaseholder)

• There's a RTM company. In that case it would be the RTM company who employ the management company