Do lease holders need to be a 'company?'

helenawp

Hi, 10 years ago 3 flat owners bought the freehold of a block of 9 flats. We had to form a company with Companies House in order to do so….we are having a nightmare with trying to change a wrongly registered DOB - been trying since last December Keep being threatened by Companies House because we haven't/can't file the company statement. Any advice please? Is it possible to just disband the company or would we lose the right to the ground rents [which pay our loans taken out to buy the freehold!]. Thank you..

subjecttocontract

Could the person who made the mistake not enlist a solicitor to help with correcting the information ?

user1977

If you can't submit the confirmation statement then you're unlikely to be able to wind up the company either, even if you wanted to.

In theory you could transfer the freehold to your names as individuals, but it's going to be simpler to sort out the Companies House issues.

mills112

you can't wind up the company as you need a company to hold a freehold if there is more than one person owning the freehold.

can you go back to the solicitors that set up the company for you? they were propably responsible for the mistake in the first place? otherwise, get a solicitor to change it for you.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6665437/do-lease-holders-need-to-be-a-company

Using a company makes things easier because if you bring in a new co-owner or someone sells both their leasehold and share of the freehold the freehold aspect is mainly dealt with by Companies House rather than the Land Registry because Company 1234 is the freeholder before and after the transactions.

Its not perfect though as you now have to do stuff in relation to the company and deal with Companies House.

As to the DoB issues, its not normally too hard to correct, the details are at https://www.gov.uk/guidance/correcting-your-date-of-birth-with-companies-house . Not had this problem but have had to change the name of one of our directors after marriage and then again after it was updated incorrectly and it wasnt a complex process

poseidon1

Resolve the DOB issue with professional assistance if struggling to do so DIY.

A company structure is by far the preferred structure for holding the freehold reversionary title of a block of flats compared to holding personally. A single corporate entity provides a clearly defined and straightforward route to changing ownership of the participants on death, divorce, bankruptcy etc of a shareholder/ director, compared to personal ownership.

In any event , you say the Freehold covers all 9 flats but only 3 leaseholders participated in acquiring the reversionary title.

This means the freehold company has a value equal to the investment value of the ground rents the company is receiving, and potential marriage values for any leases which are declining and had not been extended ( before anyone chips in that marriage values have been legally abolished - not yet, pending a legal challenge now underway).

Liquidation of such a company could therefore trigger a 'notional' shareholder gain attracting individual CGT liabilties on the shareholders concerned.

Then having gotten rid of a perfectly serviceable freehold company, you may still find it more efficient to install a flat management company to sit between you and the 6 leaseholders, rather than running the block as an unincorporated partnership between the 3 of you, making a nonsense of dissolving the original freehold company in the first place.

Suggest step back and think this through properly, a DOB issue is no reason ( at all) for dismantling a carefully structured reversion company.