I appeal to your higher wisdom.
Here?
No, seriously, you've come to the right place. This is the kind of topic we know all about. Our advice is also free. But, then, we don't offer any protection against bad advice either.
I understand this
kind of setup quite well... it's usually set up as a bunch of Leaseholders each having a share of the Freehold. Your scenario appears slightly different, but only slightly, in that there are >1 Leaseholder but only 1 Freeholder. The Freeholder is you... or kind of you... it's actually you masquerading as a company... of which you would need to become a / the Director. The Freeholder would, indeed, have responsibility for the building... unless certain parts had been 'demised' under the Lease... to understand this you'd need to get it into your clammy hands and be prepared to read. Don't ever take what anyone says at face value in these matters.
This is why going to a Solicitor isn't a bad idea... but, instead, let me make you aware of some things...
You say there is talk of the need for a Management Company... isn't there one already? Is this a new Development just starting out? Anyway, the idea is that this the case... and the Management Company is a real Company (boo!)... one that has a Company Number and is registered at Companies House... and a Company that has Directors and even Shares (entirely notional Shares at that)... and, yes, Companies House will chase you every frikkin' year for Accounts and Confirmation Statements... one of which they'll charge you for... it doesn't matter if you're not a real Company... or if they've even agreed that you are (what they call) Dormant... they ask you to do these things every bloody year! And it's onerous. And their IT systems are terrible to use.
And even though HMRC want to get involved... they are more reasonable. You can have a conversation with them (actually, I wrote a letter) and you can tell them that, sure, you're a Company. But you're not a real Company... you're a sham, a fake, you're nebulous, you're a vehicle, a means to an end... and they listen. They're only interested in cash (tax)... and you say... "
we're not a Company, really, we don't make anything, we don't sell anything, we don't do anything, we don't have customers, we don't have suppliers" and they get that... they allow you to be "Dormant" for a period of 5 years... after that, who knows what happens?
But Companies House
aren't as reasonable. They just flatly state - "
Accounts must be filed each year for Companies House each year. If the company is not trading then Dormant accounts can be filed. The £13.00 charge does not relate to the accounts but to the Annual Return which must also be filed each year." - they also insist on writing to you in Welsh sometimes. They're idiots. They want me to file something each year that basically confirms my name hasn't changed and we have capital of "£0"... each and every year it amounts to "£0" yet they persist to insist it's somehow valuable to them.
And the ICO
aren't as reasonable, either. The ICO is currently undertaking a very proactive fishing exercise where they're using someone's money (is it taxpayer's money?) to write to every Company they can find at Companies House and they're trying to scare and threaten them into paying the fee for the privilege of being registered or something... accredited? validated? made safe?... who cares, it's just a Big Brother con attempt - but as soon as you're a Company they'll be writing to you. Offering you no value, but causing you loads of headaches as you try to exempt yourself from their all-encompassing fishing net... what the ICO wants is every listed Company paying their fee, regardless of whether it's appropriate or not. They send letters to scare you into complying... to get you thinking it's just not worth the hassle of fighting the system... pay up and shut up.
Insurance
can be[come] problematic. You might think currently it's cool because it's being shared equitably and without any friction. Problem is if that changes. You're still beholden to a third party. Who is another entity in their own right. Today they may just be advised of the premium and willingly pay up. Next year it might be different. The premium might go up, a lot. And the person might not have the money. Then you get into chasing... and it can affect relationships. You don't need to think hard about this before you can imagine some problems. Also, you start going to a Broker rather than just getting a quote off the web, because they're better at finding policies for less typical (not unheard of) scenarios.
Finally... you are a Leaseholder. The other flat owner is too. You're just learning about this. They may know nothing. What if they suddenly decide to make material changes to their property. The property they believe they own outright... but you know you exercise full control over, as Freeholder. Do you want that conversation where the person in the other flat is telling you they want to make a substantial change that you aren't going to allow? Of course, they may understand this and, of course, it may never arise... but what if it does?
So... if I knew then what I know now? Would it have stopped me proceeding in purchasing a Leasehold property with share of Freehold? No, because this is my home we're talking about - and although all this stuff is farcical nonsense, time-consuming and costly - and I love this house (and, I guess, I can put "
Director" on any form that asks for my Occupation, if I want)... but... if it is was a cold, hard, calculated property investment for let? Maybe.
My personal mantra for property bought for let?
Keep it simple. Freehold. Avoid Leasehold. Responsible for its own roof. Avoid Leasehold. Check the boiler. Avoid Leasehold. Parking. Avoid Leasehold. Area. Avoid Leasehold.
You can see it's
Leasehold I'm dead against. For me that
really means blocks of apartments where costs, that you have no control over, can spiral out of control. However, it also applies to simpler situations too where there is another third party Freeholder who is, somehow, part of your existence. This situation you describe is subtly different... but it is also somewhat complicated when a Company comes into play.
Would I say you're worrying needlessly? Not at all.
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