Flat management companies are those which hold a freehold interest in a certain property and provide facilities to the residents in the residential parts of the property.
These residents pose themselves as directors and shareholders of the Flat Management Company. In large properties, not everyone can be accommodated as a director, however, each one will be allotted one share in the company.
The main advantage of such a company setup is that the directors can manage the business of arranging facilities to the common public areas. In case a member wishes to sell their property, they should transfer their share, in the flat management company, to the person the property is sold to.
There has been a sharp increase in the number of Flat Management Companies as the newly introduced regulations allow leaseholders to outright buy and manage the freehold interest in the property.
Several provisions in the Commonhold and Leasehold Reform Act 2002, have found to be very favorable to leaseholders. The leaseholders can extend short-term leases irrespective of the duration of occupancy. This gives the occupants power to manage the freehold company for their own benefit.
By setting up a Flat Management Company, the expenses which were incurred towards upkeeping of communal and public access areas, along with an influx of suppliers and services, is to be borne by the residents themselves. The extent of accountability has been increased along with a concrete effort to reduce costs connected with their provision.
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