Options for directors of a limited company to avoid having to manage a block?

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    Options for directors of a limited company to avoid having to manage a block?

    Can the directors of a limited company that owns the freehold on a block of flats appoint a family member (who is not a director) to manage the property, and therefore 'hide' by preventing direct contact from the leaseholders?
    Or if they are not prepared to be the direct contact, are they required to appoint a 'proper' managing agent
    registered
    under Redress Scheme?

    #2
    I assume this person is working for free. Otherwise, what is the basis under the lease for paying them? Almost certainly it is that they are a managing agent, in which case they will have to belong to a redress scheme, and comply with any other relevant legislation.

    Is this share of the freehold? Unfortunately with so many absentee landlords, they can end up with directors who won't engage, as well.

    Directors are allowed to hide behind a service address, often the registered office address.

    Comment


      #3
      It is not a share of freehold.

      5 leases (2 commercial, 3 residential). Freehold owned by the limited company. Unable to do RTM or collective enfranchisement because only have 3/5th residential split.

      This person is the father of the 2 directors, and has same name and initials as one of the directors. He is neither a shareholder nor a director himself. He/They are not following the terms of the lease, yet any formal letters or emails we send to the directors (as the owners of the freehold) by way of formal complaint are intercepted by him as the registered address for the limited company is his home address. Also the only email provided is the personal email of the father.

      The father insists on everything in writing by post, and yet is severely dyslexic (which he uses as his excuse to fail to understand what we mean on various things). It is like nailing jelly to a wall.

      He signs all letters to leaseholders as 'his name' (which happens to be the same as one of the directors), followed by 'Consultant', and sends them on headed notepaper of the limited company.
      When we have requested a meeting to discuss various issues, the father is the only who turns up, and plays out a masterclass as rogue landlord.

      We would prefer to self manage or appoint our own managing agent, but he declines self-manage (presumably because his power trip fun would be over) and insists on appointing his own agent, and then telling the agent to bump up the price, for example. They assume that he is the landlord because of the duplicate name, and act on his instructions.

      The lease does not provide for the cost of the managing agent to be recovered from the leaseholders via the Service Charge, yet he/they still include it. Also, he/they add in various other expenses which are not permitted within the lease.

      3 years running his appointed managing agent has resigned prior to the end of their 12 month initial term.

      He/the freehold company has now written to us to say the agent no longer involved and all correspondence to go to the registered address / his home address.

      So.…. our aim is to inform the directors that their father cannot act as the 'consultant' as he is effectively a managing agent and would have to be a member of Redress Scheme. By not being a member it is denying us the opportunity to raise a formal complaint.

      A couple of years ago, he appointed a managing agent (a limited company) which we then discovered he was the sole director. The local council became aware that the managing agent (limited company) was operating without Redress Scheme
      membership
      . They successful fined the company £5,000 (max fine) but the company was folded and the fine never paid.

      Comment


        #4
        So effectively, what we are trying to establish is whether a Ltd Co can use a consultant to manage their affairs, or would that consultant be classed as 'Managing Agent' and therefore need to be under Redress Scheme. We suspect the answer to that is yes, Redress Scheme would be required.
        If the father magically changed his status from 'consultant' to employee, would he avoid the requirement to be under Redress Scheme?

        And secondly, is there any angle to enforce a meeting solely with the actual owners (the directors of the limited company that owns the Freehold), so the father is not in attendance/involved?

        Comment


          #5
          Can't see any easy solution for you on this I'm afraid aside from the FTT (expensive , time consuming & incompetent) but you might just check collective enfranchisement eligibility as I believe it's 25% of floor area that counts. If you have 3 very large flats you might wing it ?

          Comment


            #6
            Agree, have no interest in going down FTT - for the reasons you have eluded to.
            Collective Enfranchisement.... interesting.... i
            s the 'no more than 25%' applied only to the ratio of internal floor space in commercial units versus floor space in residential units? ie only assessing the building, or does an outside car park (referred to in the lease as being part of "Common Parts") come into the equation?
            I have just read elsewhere that where Common Parts are common to both residential and commercial, then they can be counted as residential for purposes of Collective Enfranchisement.

            Comment


              #7
              Source: www.leaseholdinfo.com/tag/leaseholders/

              "I want to buy my freehold and there is a commercial element in the building, can I do this?
              The short answer to this: yes, provided that the area in question does not take up more than 25% of the building.
              The test can be complicated to apply, but essentially you are looking for a precise measurement of the net internal floor area of the property, compared with the net internal floor area of the remainder of the building. There are a number of rules that need to be applied to determine how common parts are dealt with.
              Generally, if these are common to the commercial and residential they can be counted as residential, but if they are wholly commercial, they count within the commercial areas. In anything but the most blindingly obvious case, specialist advice, including specialist measurement advice should be obtained."

              Comment


                #8
                You have to demand your local MP to sort out this problem and get the 25% restriction on floor area removed. ( 25% is an artificial legal barrier imposed by Housing Department Senior Servants working under a Housing Minister, who has never bought a leasehold property ).

                Comment


                  #9
                  Chester14,

                  Aha, that's interesting about the common parts rule, I'd not heard that but my gut feeling is if the car spaces are not specifically allocated to the businesses then you could rightly include them but I have no experience so you'd best get qualified advice, as it's possible you could become liable for the landlord’s legal costs once you start the process.
                  It might work as a bargaining chip for an informal approach at least..... good luck.

                  Comment


                    #10
                    Originally posted by Gordon999 View Post
                    You have to demand your local MP to sort out this problem and get the 25% restriction on floor area removed. ( 25% is an artificial legal barrier imposed by Housing Department Senior Servants working under a Housing Minister, who has never bought a leasehold property ).
                    Is this really something a local MP can/will do on an individual case basis?

                    Comment

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