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flat (residential) management company accounting

flat (residential) management company accounting

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I own a flat in a converted house.  Some years ago 4 of the 5 flat owners formed a company (limited by Guarantee) to purchase the freehold of the property.  The basic TB is an asset and 4 loan accounts.

Last year the final flat was sold and the new owner wants to (a) extend the lease and (b) become a member of the company.  Having researched the matter a bit the expected income from extending the lease exceeds the value of the asset in the TB, even before we ask the new owner to "buy" into the company.  My target is, if at all possible, to disperse the two inflow (lease an company buy-in)  to the existing members but I'm really not sure how to account for this.


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By The Innkeeper
17th Nov 2013 17:51

see my


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By Novakova
17th Nov 2013 21:29

RTM company?
In my experience the usual setup would be:
a non-trading RTM management company would manage the building, paying costs such as building insurance and upkeep of communal areas and collecting service charges, and
freehold owned jointly as tenants in common by the leaseholders.
Are you sure that the company owns the freehold??

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Euan's picture
By Euan MacLennan
18th Nov 2013 09:56

Divide by 5

Add up the balances on the existing 4 loan accounts.  Divide by 5.  Ask the 5th tenant to contribute that amount to the company as his contribution to the cost of the freehold and repay that amount equally between the original 4 members so that all 5 end up with the same loan to the company for the purchase of the freehold.

Why do you need to charge a member of the freehold owning company for a lease extension?

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