Share of freehold

pieroabcd

How are the owners' votes (and responsibilities for the costs) calculated? 1 vote per flat and 1 unit regardless of the size? or are they proportional to the % of square meters owned over the total (as is done in other countries)?
A studio flat counts as 1 unit and pays as much as a 4 bedroom flat?

eddddy

flat34 said:

Does it have any implications, such as becoming personally liable for any debts the company might rack up (e.g. if other shareholders fail to pay their share)? 

You'd have to read the rules of the company - but it's unlikely that shareholders would be personally liable for company debts.

But more generally, there's the question of what 'the company' will do if one or more leaseholders are unwilling or unable to pay to pay their service charge.

(e.g. the roof is leaking and needs repairs - but one or more leaseholders are refusing to pay their share - so the repairs can't be done.)

flat34 said:

Or would I have to file a tax return or have any sort of other responsibility?

The company might earn income from ground rent and/or lease extensions. They might decide to pay some/all of that money to shareholders as dividends. Dividends are usually taxable (you'd need to look at HMRC's rules on taxing dividends).

propertyrental

eddddy said:

flat34 said:

Does it have any implications, such as becoming personally liable for any debts the company might rack up (e.g. if other shareholders fail to pay their share)? 

But more generally, there's the question of what 'the company' will do if one or more leaseholders are unwilling or unable to pay to pay their service charge.

(e.g. the roof is leaking and needs repairs - but one or more leaseholders are refusing to pay their share - so the repairs can't be done.)

flat34 said:

Or would I have to file a tax return or have any sort of other responsibility?

But that's no different to any other leaseholder/freeholder relationship.

The same issue could arise where the freeholder is a completely unrelated 3rd party (individual or company), so the fact that the leaseholders jointly own the freehold changes nothing.

If a leaseholder fails to pay, the freeholder (whoever it is) can enforce payment, via the courts if necessary.

eddddy

propertyrental said:

But that's no different to any other leaseholder/freeholder relationship.

The same issue could arise where the freeholder is a completely unrelated 3rd party (individual or company), so the fact that the leaseholders jointly own the freehold changes nothing.

If a leaseholder fails to pay, the freeholder (whoever it is) can enforce payment, via the courts if necessary.

I was making a slightly different point. I think a lot of people feel the situation is different when you have a shared freehold vs a 3rd party freeholder- because you are dealing with your neighbours..

So a group of people have to agree to take legal action against their neighbour - possibly ending-up forfeiting the neighbour's lease, evicting them, and selling their flat to pay the service charge.

(Maybe an extreme example would be a neighbour who is a parent, who has become ill, so is unable to work, so has limited income, so is unable to pay the service charge.)

I've come across a few joint freeholders who are not prepared to take legal action against a neighbour who is in financial difficulty.


My intention was to point-out to the OP that, if they become a joint freeholder, perhaps they should consider what their position would be. Would they urge their neighbours to take legal action? Or if not, would they contribute to the shortfall? Or would they live with a leaking roof?



It's easier to "look the other way" when it's a 3rd party freeholder who is taking legal action against a distressed neighbour. It's harder when the legal action is being taken in your name.