Can the freeholder be the director in both companies?

[Propsta]

Freehold for a site with 21 flats was sold to a private investor who did not realise until after the purchase, one of the property is on a shared ownership



Service charge sky rocketed upon acquiring. They were taken to the tribunal and the amounts where revised.



They continued mismanaging and over the past 8 yrs, no service charge statement were sent for 4 of those years. However a flat amount was still being made by the leaseholder while they dispute the continued increase in service charge and to obtain records of the missing service charge records. After 8 years, full records including receipts for the missing period have now been received.


Leaseholder has noticed that some are invoices from a company to the landlords. However the landlord is the director of the company issuing invoices and the director of the company receiving and paying invoice. The freeholder has also recruited 4 full time staff that are being used to service the property including cleaning communal areas and gardening. They’ve also bought all equipment required to do the job and recording a rental figure every 3 months for use of equipment to service the site. Prior to all of this, these jobs were sourced from an external company.



Is what the landlord/freeholder doing right or legal?

[eagle2]

The freeholder is entitled to charge for services which he is providing, the question is whether or not the charge is reasonable, is he charging more or less than the external company?

[Gordon999]

The leaseholders are entitle to set up RTM to claim the right to manage the service charge account and stop any overcharging by freeholder.

But the problem is most leaseholders are not very smart when facing up to the freeholder.

[eagle2]

It should be relatively simple to apply to the FTT and argue that the freeholder's charges are unreasonable as long as you can produce a comparable lower quote from an external independent source.