1. I will aim to sell the leasehold of the house and also sell the RPM limited company together. As I will not want to have more tie with this RPM limited company if I do not live in it. But I have no idea what to do if the future potential buyer is not interested in the freehold purchase.
2. My cost of the house is under £500,000. But I will have the leasehold of the flat under my name, not the RPM owns the flat, so no ATED tax if that is your question?
3. Once I have done my loft conversion, I will try to sell the shares to other two leaseholders with a reasonable price. Of course, that also depends on if they want to buy it.
4. If the other leaseholders buys the share of the company, and we all become share of freehold. Then we can extend anyone’s lease for free. But if I still have the sole ownership of the freehold, then I will charge a reasonable premium on that.
I am more than happy to give you as much information as you need. So please feel free to leave comment and I will try my best to answer.
Indeed, I am buying a lease hold flat off the current owner and the seller is offering me the freehold as well. From what I understand, having freehold is always better as one will have more control on the building, thus I requested to purchase the freehold as well.
As I am dealing with a state agent, I cannot get in touch with the seller directly, the information I am given is relatively limited. From what I understand, the housing agent said the freeholder will only need to cover the building insurance and all other repair maintenance will be shared by all 3 flats (which includes myself). And on top, freeholder can collect £200 pounds ground rent from each flat. I asked the agent, if the seller can transfer the freehold right to me directly under my name, instead of me buying the company. The agent told me that the freehold right has to be sold as a limited company structure and it is hard to transfer the freehold under a person’ s name. (The agent may not know much and he just wants to secure the deal)
In order not to give myself into trouble, I did all research I can, from land registry and company house. And here is the timeline: There are 3 flats namely Flat A,B,C, Flat C is the one I intended to buy.
04/ 2014: Flat A was sold under a lease of 125 years
08/ 2014: Flat C was sold under a lease of 125 years (Owned by Mr & Mrs seller)
01/2015: Flat B was sold under a lease of 125 years
08/2016: The Resident Property Management company (RPM)was set up. Mr & Mrs Seller are the directors of the company and each own 3 shares.
12/2016: The RPM bought the entire freehold for £17,500, shown on Land Registry.
05/2018: File Dormant Company Account
06/2019: File Dormant Company Account
05/2020: File Micro company Account
The whole reason for me to purchase the freehold is to have more control on the flat (better flexibility when I do potential loft conversion and also no ridiculous services charge). The ground rent part just comes as a bonus.
The seller just says the limited company owns the freehold and I can charge other two leaseholder ground rent and service charge. Sadly there is not much more information I can obtain. The seller sells the flat under leasehold originally, but with a note saying it is possible to purchase the freehold as well. That is why I am here to gather ideas to see if there is a pitfall or potential responsiblity when I get this freehold company.
I reckon the other two flat leaseholders are not interested in the freehold purchases, that s why remaining leaseholder (the current seller) gets them all (all shares)
Thank you for all your inputs. I am not trying to downgrade Accountants' effort and work, it is more about to understand how much work I have to put in to manage this limited company.
Although I have agreed to the sales, I haven't signed the final contract yet which means I can still pull out if I don't feel confortable with the sale.
A little bit more background:
The seller will sell the freehold of the entire property as a Resident Property Management limited company at the price of £20,000. Looking at Company house history, the company has been filing account for Dormant Company since the set up of the company. But recently, it changed to file Micro company account, I am not sure why this was done.
As the freeholder, I do not intend to make any profit just manage the property as one of the 3 flats is the one I will be living in. I am planning to keep the profits made on grount rent income.
My answers
1. I will aim to sell the leasehold of the house and also sell the RPM limited company together. As I will not want to have more tie with this RPM limited company if I do not live in it. But I have no idea what to do if the future potential buyer is not interested in the freehold purchase.
2. My cost of the house is under £500,000. But I will have the leasehold of the flat under my name, not the RPM owns the flat, so no ATED tax if that is your question?
3. Once I have done my loft conversion, I will try to sell the shares to other two leaseholders with a reasonable price. Of course, that also depends on if they want to buy it.
4. If the other leaseholders buys the share of the company, and we all become share of freehold. Then we can extend anyone’s lease for free. But if I still have the sole ownership of the freehold, then I will charge a reasonable premium on that.
Hi all again,
I am more than happy to give you as much information as you need. So please feel free to leave comment and I will try my best to answer.
Indeed, I am buying a lease hold flat off the current owner and the seller is offering me the freehold as well. From what I understand, having freehold is always better as one will have more control on the building, thus I requested to purchase the freehold as well.
As I am dealing with a state agent, I cannot get in touch with the seller directly, the information I am given is relatively limited. From what I understand, the housing agent said the freeholder will only need to cover the building insurance and all other repair maintenance will be shared by all 3 flats (which includes myself). And on top, freeholder can collect £200 pounds ground rent from each flat. I asked the agent, if the seller can transfer the freehold right to me directly under my name, instead of me buying the company. The agent told me that the freehold right has to be sold as a limited company structure and it is hard to transfer the freehold under a person’ s name. (The agent may not know much and he just wants to secure the deal)
In order not to give myself into trouble, I did all research I can, from land registry and company house. And here is the timeline: There are 3 flats namely Flat A,B,C, Flat C is the one I intended to buy.
04/ 2014: Flat A was sold under a lease of 125 years
08/ 2014: Flat C was sold under a lease of 125 years (Owned by Mr & Mrs seller)
01/2015: Flat B was sold under a lease of 125 years
08/2016: The Resident Property Management company (RPM)was set up. Mr & Mrs Seller are the directors of the company and each own 3 shares.
12/2016: The RPM bought the entire freehold for £17,500, shown on Land Registry.
05/2018: File Dormant Company Account
06/2019: File Dormant Company Account
05/2020: File Micro company Account
Thank you in advance for your replies.
The whole reason for me to purchase the freehold is to have more control on the flat (better flexibility when I do potential loft conversion and also no ridiculous services charge). The ground rent part just comes as a bonus.
The seller just says the limited company owns the freehold and I can charge other two leaseholder ground rent and service charge. Sadly there is not much more information I can obtain. The seller sells the flat under leasehold originally, but with a note saying it is possible to purchase the freehold as well. That is why I am here to gather ideas to see if there is a pitfall or potential responsiblity when I get this freehold company.
Would you mind telling me a bit more?
I reckon the other two flat leaseholders are not interested in the freehold purchases, that s why remaining leaseholder (the current seller) gets them all (all shares)
Hi all,
Thank you for all your inputs. I am not trying to downgrade Accountants' effort and work, it is more about to understand how much work I have to put in to manage this limited company.
Although I have agreed to the sales, I haven't signed the final contract yet which means I can still pull out if I don't feel confortable with the sale.
A little bit more background:
The seller will sell the freehold of the entire property as a Resident Property Management limited company at the price of £20,000. Looking at Company house history, the company has been filing account for Dormant Company since the set up of the company. But recently, it changed to file Micro company account, I am not sure why this was done.
As the freeholder, I do not intend to make any profit just manage the property as one of the 3 flats is the one I will be living in. I am planning to keep the profits made on grount rent income.