Leasehold Management Companies: What You Need to Know
If you own a leasehold property, the building in which your flat or apartment is located is known as the freehold. The freehold is usually owned either by a landlord or by a group of residents who form a management company.
Understanding how freehold ownership and management companies work is essential, as it affects how your building is maintained, insured, and managed on a day-to-day basis.
Management Company
In buildings with several leasehold flats, it is common for the leaseholders to become members of a management company. This company is then responsible for the day to day running and maintenance of the building.
One of the main responsibilities of the management company is to ensure that there is a valid policy of insurance in place for the building. In doing so, the management company effectively carries out the obligations that would normally fall to a landlord under the lease.
Like any other company, registered at Companies House, the management company must comply with legal requirements such as filing annual returns. Part of this return consists of the accounts of the company certified by an accountant.
The idea is that all the flat owners decide the matters which are the responsibility of the company such as repairs to the building. It requires a bit of time and effort to be put into the running of the company by all the flat owners. You will need to be prepared to be involved accordingly. Some leaseholders collectively decide to appoint professional property managing agents to assist with the accounts and day to day running of the building.
Freehold Landlords
In smaller properties where there are only a limited number of flats (usually between 2 and 3) the freehold is often owned by an individual landlord. The landlord may be one of the residents of the flats or may no longer reside in the building.
Whilst it is preferable nowadays to own the freehold collectively by way of a management company, in some instances residents may not want the hassle of filings at Companies House and therefore for small blocks of flats the freehold can be owned collectively under a trust deed. The downside to this is that upon every sale of each flat, a change to the freehold ownership is also required. Under a management company the ownership remains the same with new members being appointed.
In summary management companies play a vital role in the smooth running of leasehold properties. While they require time, effort, and sometimes professional help, they offer a structured and long-term solution for managing shared buildings.
Whether you are considering buying a leasehold property or already own one, understanding how freehold ownership and management companies operate can help you make informed decisions and avoid future complications.
For further information regarding management companies and freehold ownership, it’s always advisable to speak with a member of our specialist property team. You can contact them at [email protected] or call on 0333 305 7777.
