Management Company Cost

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    Management Company Cost

    Hi, we own a flat in a share of freehold of 5 flats.

    None of the other 4 freeholders (all directors in the freehold company) cares about the freehold management (no meetings, no bank account, no ground rent, no tax filing....).

    But all agree to pay a third party company to manage the freehold on our behalf.

    Does anyone know how much such a company would charge? Any online based one to advice?

    Tvm

    #2
    The company with no ground rent income has to file an annual report as a dormant company to Companies House to keep its listing or it will be placed into liquidation and you lose the freehold title of your building to the Treasury. You can check the company listing online at Companies House website for date when the next filing report is due or you will be fine.

    Your flats may lose market value because the buyers cannot get a mortgage so you need a company secretary to manage the company's filing liability to Companies House. A shop in your local shopping parade offering " bookkeeping and accountancy services" may help you. Just go and ask for a quote for secretary service for a dormant company. .

    Comment


      #3
      I read it as being the cost of managing agent + company secretary services.

      The freeholder cannot not care about insurance, and there are other things that they must do or risk prosecution.

      Comment


        #4
        thanks both! Is it fair to assume that, if none of the directors want to be involved in the admin and management of the freehold, we need to hire :

        1) company secretary services (for meetings, company filings, meeting minutes etc...)
        2) accountant (for tax filings)
        3) estate management company (for managing cleaners, inspections, paying bills)

        Comment


          #5
          I could only give you an order of magnitude cost for the fees, at the moment, and they will depend on local wage levels, so I'll leave that part to others.

          However, using a managing agent doesn't remove the responsibilities that come with being a director. Ultimately they are the ones that will get prosecuted, if things go wrong.

          Comment


            #6
            A managing agent could act as company secretary and also handle the certification of service charge accounts (dependent on the lease wording). Typically a managing agent's fee is expressed as a unit / per flat charge. These are region and 'amenity' specific and can be anywhere between £150-£500 per unit per annum, plus VAT. For example, a block with a concierge, gymnasium, swimming pool and landscaped gardens would take up more of a managing agent's time than a block without those amenities...

            Comment


              #7
              If no one cares about the property it risks falling into disrepair and the flats becoming un sellable, and without insurance it would be disastrous if there was a fire or accident.

              As for costs most MA charge about £150-£250 per flat which would be recouped from LH via a service charge. If a MA charges more than a LH could argue it is unreasonable and not recoverable as a SC.
              Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

              I do not accept any liability to you in relation to the advice given.

              It is always recommended you seek further advice from a solicitor or legal expert.

              Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

              Comment


                #8
                Note that these are the costs for management. If they have to bring contractors in, you can expect to have to pay their invoices at cost. If there are larger works, you can expect to have to pay the cost of a surveyor to act as project manager, and perform duties under the Construction, Design and Management Regulations, at between about 12 and 15% of the contractor's price.

                Comment


                  #9
                  Unfortunately,the directors have to agree to farm out the running of the company to an agent.
                  If you get no where by calling a directors meeting to put all above to them, then give them a copy of below
                  ( found at http://ram2.hostbyet2.com/ )
                  Comapanies act 2006

                  Stating that if they do not wish to to act as a director should, ( which is a legal requirement ) then they should not be a Director, and resignations will be accepted.
                  If they fail to agree, you can go to the F.T.T. ( was the LVT ) to have a Manager appointed.


                  CHAPTER 2
                  GENERAL DUTIES OF DIRECTORS
                  Introductory
                  170 Scope and nature of general duties

                  (1) The general duties specified in sections 171 to 177 are owed by a director of a
                  company to the company.
                  (2) A person who ceases to be a director continues to be subject—
                  (a) to the duty in section 175 (duty to avoid conflicts of interest) as regards
                  the exploitation of any property, information or opportunity of which
                  he became aware at a time when he was a director, and
                  (b) to the duty in section 176 (duty not to accept benefits from third parties)
                  as regards things done or omitted by him before he ceased to be a
                  director.
                  To that extent those duties apply to a former director as to a director, subject to
                  any necessary adaptations.
                  (3) The general duties are based on certain common law rules and equitable
                  principles as they apply in relation to directors and have effect in place of those
                  rules and principles as regards the duties owed to a company by a director.
                  (4) The general duties shall be interpreted and applied in the same way as
                  common law rules or equitable principles, and regard shall be had to the
                  corresponding common law rules and equitable principles in interpreting and
                  applying the general duties.
                  (5) The general duties apply to shadow directors where, and to the extent that, the
                  corresponding common law rules or equitable principles so apply.

                  The general duties
                  171 Duty to act within powers

                  A director of a company must—
                  (a) act in accordance with the company’s constitution, and
                  (b) only exercise powers for the purposes for which they are conferred.
                  172 Duty to promote the success of the company

                  (1) A director of a company must act in the way he considers, in good faith, would
                  be most likely to promote the success of the company for the benefit of its
                  members as a whole, and in doing so have regard (amongst other matters) to—
                  (a) the likely consequences of any decision in the long term,
                  (b) the interests of the company’s employees,
                  (c) the need to foster the company’s business relationships with suppliers,
                  customers and others,
                  (d) the impact of the company’s operations on the community and the
                  environment,
                  (e) the desirability of the company maintaining a reputation for high
                  standards of business conduct, and
                  (f) the need to act fairly as between members of the company.
                  (2) Where or to the extent that the purposes of the company consist of or include
                  purposes other than the benefit of its members, subsection (1) has effect as if
                  the reference to promoting the success of the company for the benefit of its
                  members were to achieving those purposes.
                  (3) The duty imposed by this section has effect subject to any enactment or rule of
                  law requiring directors, in certain circumstances, to consider or act in the
                  interests of creditors of the company.

                  173 Duty to exercise independent judgment
                  (1) A director of a company must exercise independent judgment.
                  (2) This duty is not infringed by his acting—
                  (a) in accordance with an agreement duly entered into by the company
                  that restricts the future exercise of discretion by its directors, or
                  (b) in a way authorised by the company’s constitution.

                  174 Duty to exercise reasonable care, skill and diligence
                  (1) A director of a company must exercise reasonable care, skill and diligence.
                  (2) This means the care, skill and diligence that would be exercised by a
                  reasonably diligent person with—
                  (a) the general knowledge, skill and experience that may reasonably be
                  expected of a person carrying out the functions carried out by the
                  director in relation to the company, and
                  (b) the general knowledge, skill and experience that the director has.

                  175 Duty to avoid conflicts of interest
                  (1) A director of a company must avoid a situation in which he has, or can have, a
                  direct or indirect interest that conflicts, or possibly may conflict, with the
                  interests of the company.
                  (2) This applies in particular to the exploitation of any property, information or
                  opportunity (and it is immaterial whether the company could take advantage
                  of the property, information or opportunity).
                  (3) This duty does not apply to a conflict of interest arising in relation to a
                  transaction or arrangement with the company.
                  (4) This duty is not infringed—
                  (a) if the situation cannot reasonably be regarded as likely to give rise to a
                  conflict of interest; or
                  (b) if the matter has been authorised by the directors.
                  (5) Authorisation may be given by the directors—
                  (a) where the company is a private company and nothing in the company’s
                  constitution invalidates such authorisation, by the matter being
                  proposed to and authorised by the directors; or
                  (b) where the company is a public company and its constitution includes
                  provision enabling the directors to authorise the matter, by the matter
                  being proposed to and authorised by them in accordance with the
                  constitution.
                  (6) The authorisation is effective only if—
                  (a) any requirement as to the quorum at the meeting at which the matter is
                  considered is met without counting the director in question or any
                  other interested director, and
                  (b) the matter was agreed to without their voting or would have been
                  agreed to if their votes had not been counted.
                  (7) Any reference in this section to a conflict of interest includes a conflict of
                  interest and duty and a conflict of duties.

                  176 Duty not to accept benefits from third parties
                  (1) A director of a company must not accept a benefit from a third party conferred
                  by reason of—
                  (a) his being a director, or
                  (b) his doing (or not doing) anything as director.
                  (2) A “third party” means a person other than the company, an associated body
                  corporate or a person acting on behalf of the company or an associated body
                  corporate.
                  (3) Benefits received by a director from a person by whom his services (as a
                  director or otherwise) are provided to the company are not regarded as
                  conferred by a third party.
                  (4) This duty is not infringed if the acceptance of the benefit cannot reasonably be
                  regarded as likely to give rise to a conflict of interest.
                  (5) Any reference in this section to a conflict of interest includes a conflict of
                  interest and duty and a conflict of duties.

                  177 Duty to declare interest in proposed transaction or arrangement
                  (1) If a director of a company is in any way, directly or indirectly, interested in a
                  proposed transaction or arrangement with the company, he must declare the
                  nature and extent of that interest to the other directors.
                  (2) The declaration may (but need not) be made—
                  (a) at a meeting of the directors, or
                  (b) by notice to the directors in accordance with—
                  (i) section 184 (notice in writing), or
                  (ii) section 185 (general notice).
                  (3) If a declaration of interest under this section proves to be, or becomes,
                  inaccurate or incomplete, a further declaration must be made.
                  (4) Any declaration required by this section must be made before the company
                  enters into the transaction or arrangement.
                  (5) This section does not require a declaration of an interest of which the director
                  is not aware or where the director is not aware of the transaction or
                  arrangement in question.
                  For this purpose a director is treated as being aware of matters of which he
                  ought reasonably to be aware.
                  (6) A director need not declare an interest—
                  (a) if it cannot reasonably be regarded as likely to give rise to a conflict of
                  interest;
                  (b) if, or to the extent that, the other directors are already aware of it (and
                  for this purpose the other directors are treated as aware of anything of
                  which they ought reasonably to be aware); or
                  (c) if, or to the extent that, it concerns terms of his service contract that have
                  been or are to be considered—
                  (i) by a meeting of the directors, or
                  (ii) by a committee of the directors appointed for the purpose under
                  the company’s constitution.

                  Supplementary provisions
                  178 Civil consequences of breach of general duties
                  (1) The consequences of breach (or threatened breach) of sections 171 to 177 are the
                  same as would apply if the corresponding common law rule or equitable
                  principle applied.
                  (2) The duties in those sections (with the exception of section 174 (duty to exercise
                  reasonable care, skill and diligence)) are, accordingly, enforceable in the same
                  way as any other fiduciary duty owed to a company by its directors.

                  179 Cases within more than one of the general duties
                  Except as otherwise provided, more than one of the general duties may apply
                  in any given case.

                  Comment


                    #10
                    When the timecomes to sell the flat , the leaseholder must be able to provide a copy of last 3 years audited service charge accounts for the buyer to apply for his mortgage.
                    If you are looking for a managing agent, its better to find a local company or local person, and be able to arrange local handy man to visit, for bulb changing etc. .

                    Comment


                      #11
                      There is no legal requirement to audit the accounts, and doing so would represent a significant part of the service charge for small conversion. There is a requirement to have an accountant certify them, if they are requested, but only for developments of, I think, more than four flats, and the standard falls far below that required for an audit.

                      Comment


                        #12
                        Yes..I agree there is no requirement to audit accounts for the service charges..
                        Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

                        I do not accept any liability to you in relation to the advice given.

                        It is always recommended you seek further advice from a solicitor or legal expert.

                        Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

                        Comment

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