Running freehold company from flat

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    Running freehold company from flat

    Hi everybody,

    Block of 12 leasehold flats here; a company we jointly own manages & owns the freehold. I'm one of the 3 directors of this company.

    The company is run from my flat and listed with Companies House as such.

    We recently sent out a reminder about lease terms to all the residents; one of them was that leaseholders should not carry on/in/from their flats "any trade, profession or business".

    One of the other smart alec leaseholders (no clue if they are running a business at home or not) has written back requesting the company stops me using my flat for running the freehold company and holding meetings there as it's a breach of my lease.

    Thoughts? I'm going to speak with him but would prefer to be well informed when I do. We don't want to hire out an office!


    Not sure about the law on this, I expect more knowledgeable ones will advise. However, analysing it from the language : the leaseholder of the flat, i.e you, is not carrying out any 'trade, profession or business' The Company which owns the freehold is. I assume that like most directors you are doing the work voluntarily.He is asking the Company to stop the Company working in the most cost effective way. I always try to be polite and unfortunately there are people who push this to the limit. It is a shame when people like him pollute the ethos.



      The lease actually says "not to carry on or permit or suffer to be carried on in or from" so legally I wonder if I would fall foul of the suffer bit.

      Yes, all voluntary. I know!! Could always run the company from the bike shed.... Or take him in there and give him a piece of our minds...


        With whom is the covenant made?

        Is there any freeholder covenant requiring them to enforce this covenant?

        If the covenant is only with the freeholder, and there is nothing that can force them to enforce it, they can choose to waive it.


          The covenant is in all of the leases under a section titled "Covenants Enforceable by the Lessor and the Lessees of the Properties"

          In addition, additional covenants listed as "on behalf of the lessor" include:

          "If required by the Lessee for the benefit of the Demised Premises to enforce or assist the Lessee in enforcing the covenants entered into ... by the Lessee of any one or more of the Properties provided that the Lessee shall (if required) indemnify the Lessor against all reasonable costs and expenses...."

          Perhaps we could argue that it wouldn't be for the benefit of the Demised Premises...


            The damages will be negative! Is any court really going to issue an injunction?

            Rules against businesses are generally there to protect from nuisance (lots of comings and going, or commercial vehicles) or to avoid planning issues. It's not really appropriate to use them against low impact businesses that do not change the planning use of the building.


              I think you can tell "Smart Alec", the Company owns the freehold title for the building and is reported to Companies House as a dormant company.

              It does not engage in any trading activity with outside parties or with any members of the public and the company is NOT operating a trade .profession or business from your flat address.


                I knew others would provide more specific and informed responses. I'm my life experience better just to ignore certain types of people. Unless, of course, there is a legal requirement to communicate. They are not worth any time or effort.


                  I don't think there is enough information here to establish that it is HMRC dormant here; having a ground rent will invalidate this. I think even administration charges will invalidate a Companies House dormancy.


                    Dormant Company is one with no significant transactions - so if the company has no ground rent income and no bank account , you can declare it is a dormant company.




                      You say you have a FH company and 12 leaseholders? Is the Awkward One a non-member?

                      All companies need a registered office. This can be a post office box (apart from landlords but bear with me). A company with a post office box would be doing well to run the business from that box, no?

                      The whole basis of RMCs and RTMCs is that volunteer unpaid directors run the company. These folk have to live somewhere. There is no requirement for RMCs/RTMCs to have a physical office. Just a registered address.

                      Acting as a volunteer director of your RMC, YOU as leaseholder are not running a business. It isn't your business. Where the heck are you supposed to do your volunteering? Government has never required that volunteer directors have to rent an office. Imagine the fuss if the cost of this was added to the service charge?

                      Turning to the lease as others have done, it sounds standard where there is an enforceable lessor covenant and an indemnity clause for any leaseholder if they wish the freeholder to act on something.

                      As you have said, the clause includes the excellent and sensible phrase..."for the benefit of the demised premises".

                      The Awkward One could well be tasked with explaining in whose benefit he/she is mithering?

                      I don't think the dormant company issue is relevant because you are obviously still acting as a director of an active landlord company. It shows insecurity and weakness to stoop to such irrelevance.

                      I'd point out that your address is merely a registered office, you are one of three volunteer directors, and you are not running a business but volunteering to help run the Awkward One's freehold landlord company, and the RMC by definition is for the benefit of the demised premises. Slam dunk?

                      I would perhaps add a question as to how exactly the Awkward One would expect the freehold to be 'landlorded' if the legal freeholder landlord didn't do this? I would further ask how the Awkward One would propose that the freehold company take itself to court (Not aware this happens) and ask for any case law and a suitable offer of indemnity per the lease based on the unfathomable costs that could arise ending up perhaps at the Supreme Court on this interesting point of law.

                      Or I'd just tell this person to b****r off with two gees in perhaps polite language. But that is not a legal opinion.

                      They would have to take your RMC to court for failure to act against itself. Good luck to them with that.

                      As to stopping somebody running a real business from their leasehold, I haven't looked for any case law and would expect to do so if I were ever to think of throwing stones. It is always and invariably when a first stone is thrown that somebody gets miffed and throws a rock back.

                      I take it the Awkward One is suspected of running a business? Please tell me somebody was, or why send a vexing letter just because you could?
                      Do not read my offerings, based purely on my research or experience as a lessee, as legal advice. If you need legal advice please see a solicitor.


                        As above post number 11

                        You are described as a

                        Nature of business (SIC)
                        • 98000 - Residents property management

                        This means the Residents are managing the property.
                        Therefore you are entitled ( and by law ) to run a leasehold block of flats from ANY resident's address within that block.

                        You are not running a business, you don't buy sand sell anything, you just administer the leaseholders money for them from within the premises.

                        Write to the miscreant leaseholder, that if he wishes to contest the above, he engages a solicitor, at his / her cost to prove you wrong ( he wont be able to )

                        I run an "in house" as I call it, Residents property management Company, and a leaseholder of mine would be sent above.


                          As others have said - simply having a company registered at an address is not the same thing as "running a business" from that address. Passage of company details to that address does not equate to "running a business" either. Nor do visits by shareholders to that address.

                          A company can hold a meeting wherever it likes. If it holds a meeting in the local pub it does not equate to "running a business" from that pub.

                          Receiving and selling goods on any non-negligible scale, seeing hairdressing clients... etc, might be.


                            Many thanks to everyone for their contributions.

                            We've got enough solid lines we can take now, so I'll discuss with the others and agree a way forward.

                            MrSoffit - The letter was sent because people had been sub-letting and it was part of addressing that; not sure why this person replied but I'll speak to him face to face if the opportunity presents itself. He's a member but not a director.

                            Interesting on SIC 98000. We're actually down as SIC 68209 - Other letting and operating of own or leased real estate. Does that make a difference for any other purposes?

                            Our thanks again for your advice.


                              The 9 series numbers were introduced a number of years ago.

                              It can be difficult to choose a category when registering a company, and I changed ours to 98000 when I checked the numbers.
                              Nature of business (SIC)
                              • 98000 - Residents property management
                              • 68209 - Other letting and operating of own or leased real estate.

                              68209 may lead the tax man to think you have a business letting out flats for payment to the company, Any flats in the country. Even buying houses and flats and letting them out or even building flats then selling the leases.
                              So best to keep to 98000

                              No problem next time to just change to 98000, as I did, as no one at Co. House will care, but 98000 will show by examples that a Residents property management does not buy and sell anything, therefore the tax man stays away from you.


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