What Does Flat Management Company Mean? Definition & Meaning for Property Management Company
. Setting-Up a Flat Management Company: a property management company is tasked with the responsibility of managing the multiple aspects which come along with the ownership of real estate. This is much akin to the role of management in any business. In addition, the term property management could be used to describe the practice of managing capitalized assets that are not real estate in nature, such as equipment and consumables. This is particularly the case in some post-secondary institutions. A real estate management company set up under the Companies Act to operate for the benefit of residents or tenants rather than being run as a business for profit is generally known as a flat management or property management company. Many types of multi-occupancy development, but particularly residential ones, need such a company and they account for a large number of the companies on the register at Companies House. We are able to arrange tax planning and structured corporate advice and solutions, utilising the advantages of double tax treaties, trusts and partnerships along with other structures and support.
Allow us to help you register your property management company and get it running, to select the best business for incorporation, or to register your flat management company with the UK Companies House. Same day flat management companies formation for £42.00. Company formations usually completed in 4-6 hours using Companies House online property management company registration services. Our methods rely heavily on information-searches made by electronic means, either from local disks and servers, or from specialised, restricted-access Websites. Apart from reducing the clutter, this approach has been shown to yield substantially faster and more accurate results, not only providing a superior service to traditional law-book based approaches, but also significant savings which we try to pass on to our clients. We supply expert advice in navigating English legal and business systems helping you set up in England, Scotland, Northern Ireland and/or the Republic of Ireland. If you have an idea for a business, we can also assist you in start-up your new business directly in the UK from the ground up. In the UK, you must register your business, which we can do for you. However, there are two other options you may wish to consider: if your organisation does not own property but simply collects money from residents for repairs and maintenance, and pays bills when they arise, then less formal arrangements may be appropriate such as a residents' association. Residents could consider buying the freehold of their properties in their own names or as trustees. Let us know how we can help.
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If your company just pays a few bills, perhaps for repair or maintenance, then your advisor may say that these payments need not go through the companies books. Less formal arrangements, such as collecting the money through a residents association, may be satisfactory.
The company could then continue to own the freehold (or head lease) of the property, but all its accounting transactions would be conducted elsewhere - the company would then be dormant. Accounts would still have to be prepared, presented to members, and delivered to Companies House, but all that would mean is a simple nil balance sheet that does not have to be audited. The prime purpose of limited companies is to limit the liabilities of entrepreneurs who use them for business purposes. In exchange for this limited liability, companies are required to make certain information about themselves available to the public. This information is filed at Companies House. The timing and presentation of the information is governed by law. Flat management companies, although mostly formed for a different purpose, are governed by the same legislation - primarily, the Companies Act 1985.
It does not allow flat management companies to be treated any differently to other companies. Managing the business of the company is the responsibility of its officers. Legally, all companies must have: at least one director (unless the company is a plc); and a company secretary. A sole director cannot also be the company secretary. There must be two officers. The directors and secretary manage the company on behalf of the members. Among other things, they are responsible for holding meetings and ensuring that all the necessary returns, accounts and other documents reach Companies House by the due date.
What is a flat management company? In law, a limited company is a 'person' in its own right. This means it can own property (such as a freehold or leasehold) and enter into contracts in its own name.
It exists independently and separately from the people involved. When a property is divided into a number of flats, each flat owner usually has a lease of their own flat but they may also hold shares in a management company that owns the freehold (or lease) of the entire building. As shareholders, the flat owners have their say in running the limited company. Normally, the company's constitution will say that shareholders who sell their flats must also transfer their shares to the new owners. This ensures that - at any given time - the limited company represents the interests of all the current flat owners. However, it remains a separate legal entity regardless of who holds its shares from time to time. A limited company would also be set up to own and manage the common parts of a development made up of separate units under common hold.
This type of company is called a common hold association. Flat management companies typically manage common parts of the building. They may have other responsibilities. Your property probably has parts common to all the flat owners living in it: boundaries, roofs, halls, drives and gardens being typical examples. These require maintenance, insurance, lighting, etc. These costs are funded by the individual flat owners, who make periodic contributions into a pooled fund.
A guarantee company provides a clear legal identity. This provides the ability for the company to own property in its own name and a democratic structure where its participants are required to adhere to the strict laws and regulations governing limited companies generally. If you want to become familiar with the description and the contents of UK guarantee companies formation packages, offered by Coddan CPM LTD and to find above, what kind of service is included in this or that UK non-profit companies registration package, to get an idea about the price of annual renewal of the service, and about the general legal requirements to the guarantee company incorporation within United Kingdom, please, select the package you need from the list, situated below the banner.
The information in the banner will be renewed according to the package you've chosen. The basic document package we provide will not differ significantly from that available at a major corporate law office.
This is our most popular package with UK residents, and includes:
The registration of your private flat management company from scratch using your own registered office address, and appoint your own candidates to the roles of director, secretary (if needed), and shareholder;
The standard capital on formation is £1,000, this is divided into 1,000 ordinary shares valued at £1.00 each (it is not required to have all of the shares issued, but a minimum of one share must be issued);
The formation of a flat management company usually takes as little as four to six hours from the time that your application and payment are received by Coddan;
The government fee for incorporation is included in the price of this package;
The following documents, which need to be printed and signed, will be emailed to you upon formation of your company:
A certificate of incorporation (requires PDF file reader);
A specially drafted memorandum and articles of association, which is required for UK companies which have business activities involving property and flats management (requires MS-Word file reader);
The first meeting of the board of directors (requires MS-Word file reader);
Share certificates and a company register.
Economy Package
£ 92.00
Annual Maintenance Fee £50.00
This is our most popular package with EU residents, and includes:
The registration your flat management company from scratch using one of our registered office addresses, and appoint your own candidates to the roles of director, secretary (if needed), and shareholder;
The standard capital on formation is £1,000, this is divided into 1,000 ordinary shares valued at £1.00 each (it is not required to have all of the shares issued, but a minimum of one share must be issued);
The formation of a flat management company usually takes as little as four to six hours from the time that your application and payment are received by Coddan;
The government fee for incorporation is included in the price of this package;
The provision of a registered office address for 12 months is also included in the price of this package (our registered office address service is charged annually);
The following documents, which need to be printed and signed, will be emailed to you upon formation of your company:
A certificate of incorporation (requires PDF file reader);
A specially drafted memorandum and articles of association, which is required for UK companies which have business activities involving property and flats management (requires MS-Word file reader);
The first meeting of the board of directors (requires MS-Word file reader);
Share certificates and a company register.
Premier Package
£ 141.95
Annual Maintenance Fee £99.95
This is another one very popular package for small and medium size businesses, such as those being run by a sole director from home, and for companies owned by overseas residents who still need a local registered office address but would rather not open local offices;
This package is often chosen by such customers, who are looking to minimise a sole director personal liability (and who are not quite familiar with the new UK corporate legislation), because this package includes a provision of a nominee secretary for 12 months. This package is also includes:
The registration your property management company from scratch using one of our registered office addresses, and appoint your own candidates to the roles of director, and shareholder;
The standard capital on formation is £1,000, this is divided into 1,000 ordinary shares valued at £1.00 each (it is not required to have all of the shares issued, but a minimum of one share must be issued);
The formation of a property management company usually takes as little as four to six hours from the time that your application and payment are received by Coddan;
The government fee for incorporation is included in the price of this package;
The provision of a registered office address for 12 months is included in the price of this package (our registered office address service is charged annually);
The provision of a nominee secretary for 12 months is also included in the price of this package (our nominee secretary service is charged annually);
The following hard bound copy of corporate documents, will be posted to you upon formation of your company:
A laminated copy of the certificate of incorporation of your company;
A hard bound copy of the specially drafted memorandum and articles of association, which is required for UK companies which have business activities involving property and flats management;
A hard bound copy of the minutes of the first meeting of directors;
Share certificates, and your company register.
Deluxe Package
£ 266.95
Annual Maintenance Fee £224.95
The Deluxe business start-up package is our most popular package with international customers, and includes:
Incorporation of your property management company from scratch using one of our registered office addresses, our nominee director and our nominee secretary, we will appoint your own candidate(s) to the role of shareholder;
The standard capital on formation is £1,000, this is divided into 1,000 ordinary shares valued at £1.00 each (it is not required to have all of the shares issued, but a minimum of one share must be issued);
The formation of a property management company usually takes as little as four to six hours from the time that your application and payment are received by Coddan;
The government fee for incorporation is included in the price of this package;
The provision of a registered office address for 12 months is included in the price of this package (our registered office address service is charged annually);
The provision of a nominee secretary for 12 months is included in the price of this package (our nominee secretary service is charged annually);
The provision of a nominee director for 12 months is also included in the price of this package (our nominee director service is charged annually);
The following two hard bound copies of corporate documents, will be posted to you upon formation of your company:
A laminated copy of the certificate of incorporation of your company;
A hard bound copy of the specially drafted memorandum and articles of association, which is required for UK companies which have business activities involving property and flats management;
A hard bound copy of the minutes of the first meeting of directors;
Share certificates, and your company register;
The general power of attorney signed by nominee director;
Pre-signed, undated resignation letter from nominee director;
The agreement for the provision of nominee service and indemnification of nominee.
Business Start-Up: Legal Requirements
A flat or property management company limited by shares in England and Wales must have at least one director, one shareholder, and may have a secretary.
You need at least one person to form this type of company. If there is only one director, and that director is a natural person in your company, that director can also act as the secretary.
A company must have at least one director who is a natural person. This requirement is met if the office of director is held by a natural person as a corporation sole or otherwise by virtue of an office.
You can register a sole director' company, if you are familiar with the secretaries duties and responsibilities, because all of them belongs to a sole director.
The directors and secretary of your company can also be shareholders.
The Companies Act imposes no restriction on the minimum age of company directors. However Companies House will actively discourage the appointment of anyone under the age of 16 from taking up a company directorship on the grounds that the individuals concerned may not fully understand the legal liabilities that go with the position and for the most part will not have the experience necessary to perform the duties of a company director.
Under the Companies Act 2006, there is no restriction on any or all of the members/shareholders being from an overseas country (i.e. outside the United Kingdom in terms of residency, domicile, citizenship, place of incorporation or all or any of those concepts).
There is no requirement for the officers of your company to be UK citizens or residents, nor for them to hold valid work permits.
Owning, or being an officer of a UK company does not, however, grant you any right to live or work in the UK if you are a foreign national.
Your company must have a registered office address within England or Wales; this is the official address of your company and will be on the public record as such.
Your company must hold its official company documents at its registered office address: its register of shareholders, and its constitutional documents.
So long as you maintain a registered office address in England or Wales, you can conduct your business from any place in the world: you do not have to run your business from your registered office address.
FORMING FLAT MANAGEMENT COMPANY. INCORPORATE A PROPERTY MANAGEMENT COMPANY IN ENGLAND
What is a flat management company? In law, a limited company is a 'person' in its own right. This means it can own property (such as a freehold or leasehold) and enter into contracts in its own name. It exists independently and separately from the people involved. When a property is divided into a number of flats, each flat owner usually has a lease of their own flat but they may also hold shares in a management company that owns the freehold (or lease) of the entire building.
As shareholders, the flat owners have their say in running the limited company. Normally, the company's constitution will say that shareholders who sell their flats must also transfer their shares to the new owners.
A Flat Management Company is normally incorporated to manage a property or group of properties where there are multiple tenants. Flat management companies often permit lessees of individual plots within the development to acquire an interest in the company, usually being a single share with or without voting rights. As with any other company, a flat management company must appoint directors and a company secretary. As a flat management company will ordinarily be a private company the requirement is for one director and one company secretary. Coddan offers a specialist flat management formation package and now provides a complete solution for developers requiring such a company. The package price of £42.00
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This type of company is called a "commonhold association". Flat management companies typically manage common parts of the building. They may have other responsibilities. Your property probably has parts common to all the flat owners living in it: boundaries, roofs, halls, drives and gardens being typical examples. These require maintenance, insurance, lighting, etc. These costs are funded by the individual flat owners, who make periodic contributions into a pooled fund.
If your company just pays a few bills, perhaps for repair or maintenance, then your advisor may say that these payments need not go through the company's books. Less formal arrangements, such as collecting the money through a residents association, may be satisfactory. The company could then continue to own the freehold (or head lease) of the property, but all its accounting transactions would be conducted elsewhere - the company would then be 'dormant'.
Accounts would still have to be prepared, presented to members, and delivered to Companies House, but all that would mean is a simple 'nil' balance sheet that does not have to be audited. The prime purpose of limited companies is to limit the liabilities of entrepreneurs who use them for business purposes. In exchange for this limited liability, companies are required to make certain information about themselves available to the public.
This information is filed at Companies House. The timing and presentation of the information is governed by law. Flat management companies, although mostly formed for a different purpose, are governed by the same legislation - primarily, the Companies Act 1985.
It does not allow flat management companies to be treated any differently to other companies. Managing the business of the company is the responsibility of its officers. Legally, all companies must have: at least one director (unless the company is a plc); and a company secretary. A sole director cannot also be the company secretary. There must be two officers. The directors and secretary manage the company on behalf of the members. Among other things, they are responsible for holding meetings and ensuring that all the necessary returns, accounts and other documents reach Companies House by the due date.
Residential Association, Flat and Property Management Companies can be registered in 4-8 working hours, on receipt of the proposed company's name, the name of the property concerned and details of the issued share capital. It has special Memorandum and Articles of Association drawn up to allow it to own, manage and administer a freehold property, which is normally divided into several dwelling units or flats, with each leaseholder owning a share in the company and may require specific clauses within the Memorandum & Articles of Association. Flat Management Companies are not available off the shelf. Compare Prices of Various Forms of Companies: Flat Management Company Registration Packages & Costs
Form a flat management company online in minutes at lawyer-free prices. Coddan was developed by expert attorneys with experience at the most prestigious law firms in the country. We've helped over 50,000 satisfied customers, and our know-how allows us to prepare legal documents quickly and efficiently. Our documents contain advanced provisions that are not found in simple "do-it-yourself" kits or manuals.
Coddan lets you take care of common legal procedures without ever leaving your home or office. Our research area contains plenty of helpful guidance. Simply answer an easy-to-understand questionnaire, and Coddan CPM LTD takes care of the rest - no need to download, no need to print. You will receive the completed legal documents printed on quality acid-free paper. You May Use This Form to Register a New Company:E-Quick Flat Company Registration Package - £42.00
Want to create a flat management company in Delaware, Florida, New York, Nevada or elsewhere? COddan provides creation and LLC registration services throughout the United States. We provide everything you need to know about the advantages of Delaware, Nevada, Florida or New York Corporations and LLCs, including an online checklist to walk you through the incorporating process step by step; Big resource section filled with sample corporate and LLC resolutions, forms, and links.
Also lots of tips on how to ensure the success of your new corporation or LLC. The LLC is the preferred entity to own real estate, equipment, boats and airplanes. Many creative estate planning strategies have been developed to utilize Nevada corporations. Estate plans where trusts have traditionally been used can often be restructured more effectively using Nevada corporations. Nevada corporations are generally more flexible and creative when passing estates to heirs than trusts are, while providing similar benefits such as avoiding probate, and potentially eliminating all estate taxes. You May Use This Form to Incorporate a New House Management Company in the USA:U.S.A. House Management Company Incorporation Package - £174.00
UK Flat Management Company Limited by Shares from only £42.00! Each limited company package includes all statutory paperwork and is fully compliant with company law. All our private UK companies are general trading companies and can be used to conduct any type of business. A Certificate of Incorporation, and the Memorandum and Articles of Association of your property management company will be sent to you upon formation of your company. You can appoint your own directors and secretary BEFORE company incorporation. This is absolutely FREE. Our 4-8 hour online incorporation service enables you to register your company quickly and effortlessly. All government and filing fees are included in the cost of our E-Quick pack. All certificates and documents will be sent directly to you via email immediately following the formation of your company. It will take just 5 minutes to complete the online registration form, then your company could be up and running within 4-8 working hours.
THE E-QUICK PACKAGE CAN BE UPGRADED WITH ANY OF THE FOLLOWING FEATURES:
1. Company Pliers Seal - £20.00. 2. Laminated Hard-copy of the Certificate of Incorporation - £5.95. 3. Laminated Hard-copy of the Certificate of Incorporation, Bound Copies of the Memorandum & Articles, and Combined Company Register - £12.95. 4. Domain Name Registration for two years - £16.00. 5. Provision of a Registered Office Address for 12 months - £50.00. 6. Provision of a Nominee Company Secretary for 12 months - £49.95. 7. Certificate of Good Standing - £35.00. 8. Notarisation & Apostille of Documents.
Live Help: Live Help is a real time "chat" feature which enables you to interact with a customer service representative without a phone call. Get answers to your questions while using our website. Clicking the "Live Help" button will start an on-line session with one of our representatives. Live Help is currently available during normal business hours. Outside of the above opening hours, our business center will be closed. When you click on the button, you will see an e-mail form that will allow you to send us a mail with your questions. Live Help is free! There are no hidden fees. We offer the service as a courtesy to our website visitors.
Dear visitors, while having a chat session with a customer, we are frequently requested to give a piece of advice on tax planning or business structuring. We would like to inform you that it is against our principles to provide online advice pertaining to these issues. The points that may be covered during a session include service description, package or service price, navigation at our website, ways of making an order, methods of payment etc. Yet, if you wish us to provide you with advice on tax or business structuring, you should be aware that this service is chargeable.
If you have any questions about the company establishment then please E-Mail or call us: 033 0808-0089 or +44 (0) 207.935.5171, fax: +44 207.504.3531.
UK FLAT (PROPERTY) MANAGEMENT COMPANY FORMATIONS FROM £42.00
We offer a range of services for business, including flat management company creation, registered office address in London, Doncaster, Birmingham, Edinburgh and in Northern Ireland. We have been offering UK company formations, nominee directors, nominee secretarial and associated services for over 10 years.
Coddan provides a wide range of corporate services including: company and partnership formation (private companies limited by shares, companies limited by guarantee, PLC public limited companies, flat management companies, joint venture and subsidiary companies, companies with bearer shares and LLP limited liability partnerships). We offer business advice to Flat Management Companies, including incorporation and corporate secretary services. We can help to set up (incorporate) a Flat Management Company under the Companies Act for the benefit of residents or tenants.
With our new online electronic company incorporation system, we take you through each step of your business formation process as quickly and as simply as possible. Coddan provides a cost-effective, rapid service for incorporating companies. Our UK company registration process is completely electronic, with no forms to complete, making us one of the few fully-electronic company formation services in the UK.
All you need to do is tell us the name of the company that you would like to form and then leave the rest to us. Your new limited company will normally be formed within 4-8 working hours of request, and minutes later you will receive your Certificate of Incorporation by email. Documents we send you via email for the electronic package are: Certificate of Incorporation - in PDF format, Memorandum & Articles of Association, First Minutes of Directors meeting, share certificates, Registers of Members, Directors and Secretaries, Directors Interests and Company charges - in Word format.
Additional services are available. With all of our formations, the Certificate of Incorporation, the Memorandum of Association and the Articles of Association are all sent to you electronically, by email as Adobe Acrobat files. Acrobat is a free reader program so you don't need anything else to view and print your documents.
It's a simple process to register your company. All you need to do is use the free availability check to see if your chosen company name is available. If so, then fill out a few details using the online forms, enter your payment details, and submit your application. No documents to sign. We form companies with you as the first directors, secretary and shareholders.
Our online order form is a completely web based application, whereby all the company details are entered into our system and submitted electronic through The Companies House Filing Service.
HOW DOES A FLAT MANAGEMENT COMPANY WORK?
In law, a limited company is seen as an 'individual' in its own right. This means it can own property (such as a freehold or leasehold) and enter into contracts in its own name. It exists independently and separately from the people involved.
WHY HAVE A FLAT MANAGEMENT COMPANY?
Flat Management companies are companies used to manage the whole of or parts of a site or building on behalf of its owners. When there are multiple tenants, Flat Management companies are normally used to protect the interests of the leaseholders. In shared properties there are often a number of areas that are common and used by all flat/unit residents.
For example, communal halls, access areas and gardens. By having a Flat Management Company you can establish a system for collecting pooled funds in order to maintain and repair any common areas. If the company will not own the freehold for the entire property then it may not be appropriate to have a Flat Management Company. A residents association may be more suitable.
THE CONSTITUTION OF A FLAT MANAGEMENT COMPANY
A British Flat Management Company has its Memorandum and Articles of Association specially drawn up to allow the company to own, manage and administer the property, which is normally divided into several dwellings, units or flats. When a property is divided into a number of flats, each flat owner has a lease of their own flat but they may also hold shares in a management company that owns the freehold (or lease) of the entire building.
TRANSFER OF SHARES - CHANGE OF OWNERSHIP
As shareholders, the flat owners have their say in running the limited company. Normally, the company's constitution will say that shareholders who sell their flats must also transfer their shares to the new owners. This ensures that - at any given time - the limited company represents the interests of all the current flat owners. However, it remains a separate legal entity regardless of who holds its shares from time to time.
Many tenants and owners of properties in the UK make contributions to management companies and various service charge funds or sinking funds. These funds pay for a variety of services and sometimes accumulate money for future repairs. Typically, residents of a block of flats will all pay a set amount each year into a fund.
That fund will either pay for joint day to day running costs of the block, such as cleaners and minor repairs, or funds will be put aside to pay for future major expenditure such as a roof repair. Some funds may do both within one fund. The charges may typically be paid to a management company, which could manage just that block of flats or any number of blocks. Sometimes residents of a block will set up their own management company, residents' association or trust to receive the funds and carry out the work. Sometimes the landlord/freeholder holds the funds and organises the work.
MANAGEMENT COMPANIES - FUNDS CREATED
Typically there are two main types of fund to which Section 42 LTA 1987 applies.
Sinking Funds involve the long term setting aside of funds for major repairs and renewals. Over a period, the fund can grow to a significant size and generate substantial investment income.
Service Charge Funds are funds where the intention is to cover only the routine day to day costs of maintaining the communal areas and paying for minor repairs and decorations. The service charges are reviewed annually and set at a level to balance the actual expenditure and leave a 'no surplus - no deficit' situation at the end of each year. In practise there may be a small amount held in reserve or carried over from the previous year. The trust will not accumulate any surplus charges or create any sort of contingency or sinking fund. Any investment income is derived only from the short- term deposit of temporarily surplus funds.
Some trusts will act both as a sinking fund and as a service charge fund, although usually the trustees would keep the two funds separate. There are a number of different situations in which sinking funds or service charge funds may be created. Not all of these will necessarily fall within the scope of Section 42 LTA 1987.
ENGLISH AND SCOTTISH FLAT MANAGEMENT COMPANIES - TENANTS OF RENTED PROPERTY
Under the terms of a rental contract either the tenant or the landlord will be responsible for repairing the property. If the landlord includes in the rent payable some figure to cover his repairing obligations the fact that the payment by the tenant will be part of his rent will not preclude the operation of Section 42 LTA 1987. However, in order to fall within the definition of 'service charge' the amount must be variable according to the costs or estimated costs of repairs etc.
So if the lease simply states that part of the rents payable will be used for servicing, repairs and maintenance etc. for which the landlord is then responsible then the matter is outside Section 42 LTA 1987 because the payments by the tenants do not amount to a 'service charge' as defined in Section 18 LTA 1985. The whole of the rent will be Schedule A income of the landlord.
FLAT MANAGEMENT COMPANIES - LEASEHOLDER OWNERS OF PROPERTY
Under the terms of the lease the leaseholder may have to pay into a service charge fund or sinking fund. The funds may be paid to an individual, a company, a trust or an unincorporated association. As the owner owns the property under a lease, the LTA 1987 will apply. If the lease specifies contributions are to be made to a service charge fund or sinking fund then an accumulation trust exists whether the funds are paid to an individual, a company, a trust or an unincorporated association.
The body holding the funds may not consider themselves to be trustees, for example a company. However if Section 42 LTA 1987 applies then the company will be holding the funds as a trustee. If the lease stipulates that tenants must pay a service charge for particular services to a service company which is not the landlord, connected with the landlord or stipulated by the landlord, this too is within Section 42 LTA 1987. In that Section 'the payee' is defined as 'the landlord or other person to whom any such charges are payable by those tenants under the terms of their leases'.
If the lease states that the tenants should arrange for services, repairs and maintenance etc. themselves but does not specify how this should be done, any arrangement made by the tenants with a service company is outside the scope of Section 42 LTA 1987. The costs in respect of service charges are not made either to the landlord or to another person to whom such charges are payable under the terms of the lease.
Finally where there is no provision in the lease for the tenants to pay into a service charge fund, but nevertheless they decide to create one, then such an arrangement is not within Section 42 LTA 1987 as the tenants are not 'required under the terms of their leases to contribute to the same costs by the payment of service charges'.
MANAGEMENT COMPANIES - FREEHOLD OWNERS OF PROPERTY
Under the terms of sale of a freehold property (a covenant of some sort) the freeholders may have to pay into a service charge fund or sinking fund. The funds may be paid to an individual, a company, a trust or an unincorporated association. Such an arrangement does not come within Section 42 LTA 1987 as it is not under the terms of a lease.
Alternatively there may be no provision to create a service charge fund or sinking fund but the freeholders together decide to form one. They may decide to pay those contributions to an individual, a company, a trust or an unincorporated association. Again this is a private arrangement not governed by Section 42 LTA 1987 and the tax treatment depends on what the freeholders decide is going to hold the funds.
FLAT MANAGEMENT COMPANIES - REGISTERED SOCIAL LANDLORDS & OTHER 'EXEMPT LANDLORDS'
Registered Social Landlords (RSLs) are, in England and Wales, independent, private sector, non-profit making bodies whose main purpose is to provide decent quality, affordable housing for people on low incomes. About three-quarters of them are charities.
Section 42 LTA 1987 does not apply to tenants of 'exempt landlords' (Section 42(1) LTA 1987). In accordance with Section 58(1)(g) LTA 1987 a RSL is an exempt landlord. There are other exempt landlords defined in Section 58(1)&(1A) LTA 1987 such as district councils and certain development corporations. See TSEM5745 where Section 58(1)&(1A) LTA 1987 is reproduced.
Whilst Section 42 LTA 1987 does not apply to RSLs and other exempt landlords, as explained below, the terms under which sinking funds and/or service charge funds are held by exempt landlords may still create a trust. Thus, in summary, reference must be made to the terms of the lease to determine the application of Section 42 LTA 1987.
A statutory trust will arise where the tenants of two or more dwellings are required under the terms of their leases to contribute to the payment of variable service charges to the landlord or other persons to whom such charges are payable under the terms of the leases. However, Section 42 LTA 1987 does not apply where the landlord is an 'exempt landlord'.
FLAT MANAGEMENT COMPANIES - FUNDS NOT WITHIN s. 42 LTA 1987
Where a fund exists but it is not within Section 42 LTA 1987, for example where freehold owners of property decide to create a sinking fund, or because the landlord is an RSL or other 'exempt landlord', then the treatment of that fund will depend on what structure is used.
An individual holds the funds. The individual could be an employee, trading as a maintenance contractor or could hold funds as trustee for the freeholders. If the latter then the sort of trust depends on the terms of the trust, not on Section 42 LTA 1987.
A company holds the funds. Assuming the company was formed to hold funds for the freeholders who created it, then it could hold the funds as trustee. Alternatively it could trade as a flat management company receiving payments under a contractual arrangement to supply services and pay corporation tax. The status of the fund will depend on the terms under which the payments are made and the terms under which the company holds the funds.
A trust holds the funds. It could be any sort of trust depending on the terms of the deed but it would not be within Section 42 LTA 1987. An unincorporated association holds the funds. This could, for example. be a residents' association. It would be liable to corporation tax unless it was acting as a trustee. Again any trust would not be within Section 42 LTA 1987. Any funds that the trustees held would be subject to the normal trust rules. It is possible for the funds to be held under a bare trust, interest in possession trust, discretionary trust or accumulation trust arrangement. The exact status will depend on the terms and nature of the trust agreement.
FLAT MANAGEMENT COMPANIES - INVESTMENT INCOME PREVIOUSLY CHARGED TO CORPORATION TAX
In the past some flat management companies have been permitted to make returns in respect of investment income, arising on service charge funds and sinking funds, as part of their corporation tax returns (see PIM1070). That is no longer appropriate where trustees are holding funds as trustees under Section 42 LTA 1987. Likewise where Section 42 LTA 1987 does not apply but the terms under which the funds are held creates a trust.
Rents receivable by flat management companies (such as ground rents - other than peppercorn rents) are outside the scope of Section 42 LTA 1987 and remain chargeable under Schedule A. Tax Bulletin Issue 37 (October 1998) explained the approach the Inland Revenue will take for all flat management companies as from 1 April 1998. However, because of the need to issue further guidance in Tax Bulletin Issue 48 (August 2000), no action will ordinarily be taken to disturb any year or Accounting Period for which a Corporation Tax return has already been made and accepted.
Where a trust return has not previously been made by a flat management company, or a trustee, of investment income arising from a fund within Section 42 LTA 1987 (or from funds otherwise specifically held on trust), the trustees will have the normal obligation to notify chargeability.
FLAT MANAGEMENT COMPANIES - NOTIFICATION FROM COMPANY'S TAX OFFICE
Where you receive a notification from a tax office dealing with the company's corporation tax, that a flat management company trust has been identified, you should set up a new record, and issue any trust SA returns, which are required. The company tax office will advise you as to the date from which trust liability first arises, and this can be from any date in the tax year. If for example the CTSA return covers the accounting period to 31st August 1999, the first period of trust SA liability will be the part year from 1 September 1999 to 5 April 2000.
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£ 42.00
This is our most popular package with UK residents, and includes:
The registration of your private flat management company from scratch using your own registered office address, and appoint your own candidates to the roles of director, secretary (if needed), and shareholder;
The provision of a registered office address for 12 months is also included in the price of this package (our registered office address service is charged annually);
This type of company is called a "commonhold association". Flat management companies typically manage common parts of the building. They may have other responsibilities. Your property probably has parts common to all the flat owners living in it: boundaries, roofs, halls, drives and gardens being typical examples. These require maintenance, insurance, lighting, etc. These costs are funded by the individual flat owners, who make periodic contributions into a pooled fund. 
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We offer a range of services for business, including flat management company creation, registered office address in London, Doncaster, Birmingham, Edinburgh and in Northern Ireland. We have been offering UK company formations, nominee directors, nominee secretarial and associated services for over 10 years.