Limited Co. Freehold vs Shared Freehold. Is it worth changing?

ferger

Hello chaps

Struggling to find good info anywhere, so hope someone in here might be able to help...

We own a leasehold flat, with the usual limited company arrangements for the three leaseholders in the block to share ownership of the freehold.  All amicable and efficiently managed etc.  At a recent company meeting, the question of whether this is the best arrangement came up, primarily because it's costing us £400pa to prepare accounts + other bits of corporate admin.

Has anyone any experience of dong this - purchasing the freehold from the limited company as a shared freehold?  Strikes me as a relatively simple transaction, albeit one that  would incur conveyancing costs...  Advantages / disadvantages? On the face of it, it seems it should be simpler and cheaper to manage the freehold this way, but no doubt there are factors I haven't considered.

All input gratefully received! 

eddddy

Is all spending on maintenance, repairs etc going through the limited company? If so, why?

If you want manage the spending on the basis of "3 individuals who each own a flat", then just do it - with no income/expenditure going through the company. You don't have to transfer ownership of the building or close down the limited company. Then they'll be little or no company accounts to prepare each year.



One big benefit of a limited company is that it makes selling/buying a flat a lot easier and cheaper.

When a flat is sold, you just transfer a share in the company to the flat buyer - instead of having to to transfer ownership of the freehold building (and potentially trigger a 'Right of First Refusal').

Also, with a limited company, you don't have to cancel and reinstate buildings insurance every time a flat is sold - which potentially saves cancellation fees.

DullGreyGuy

ferger said:

Has anyone any experience of dong this - purchasing the freehold from the limited company as a shared freehold?  Strikes me as a relatively simple transaction, albeit one that  would incur conveyancing costs...  Advantages / disadvantages? On the face of it, it seems it should be simpler and cheaper to manage the freehold this way, but no doubt there are factors I haven't considered.

Firstly you are going to have to buy it off the company at fair market value, depending on what that is you may have stamp duty to pay. The company may make a profit on the sale so will have corporation tax to pay and you would then presumably dividends out what left of the monies in which case you pay your taxes on that too. 

Being outside the structure of a company makes like more difficult as you don't have the governance and the wrapper of a company around everything. Any services, insurances etc you will each become fully and severally liable for as the freeholders. All contracts have to be ended and restarted when a freeholder changes. Some companies won't deal with multiple parties as the contractors and so you are further into the rabbit hole of you personally being liable and hoping to get the monies back off the others.

You can save the costs by learning to do the accounts and returns yourselves, unless someone says there's special rules for freeholding entities.