Property Management Company
A Property Management Company exists to manage the multiple responsibilities that which come with the ownership of real estate. It administers freehold or leasehold property or properties either on its own account or as trustee. It commonly exists to administer a single jointly-owned property, but it can be used for administration of multiple properties. Properly incorporated under the provisions of the Companies Act, a Property Management Company operates for the benefit of residents rather than being run as a business for profit.
Typical responsibilities for a Property Management Company are the management of a large house divided into separate apartments, a block of flats, a housing estate or commercial properties divided into units. Where a property is divided into separate units (whether for residential or commercial purposes) there are usually common areas such as access paths or roads, stairways or gardens which someone has to look after. If nobody is responsible nothing will happen! If there is no landlord taking care of these matters, the simplest legal device is to set up a company to own the freehold (or head lease) of the property, and for ownership and management of the company to be divided between the unit-holders or residents.
The Company may have the sole function of holding the title to the overall property. But many Property Management Companies assume responsibility for the maintenance and repair of the property’s fabric its common parts. This may cover matters such as the costs of security and caretaking services, cleaning and maintaining halls and stairways, gardens and grounds, repairs to roofs and gutters. The company normally appoints subcontractors to handle these tasks and oversees the contracts to ensure that they are being properly executed at reasonable costs.
Ownership and management
The company is run by a board of directors elected by the shareholders, and reviewed or re-elected at the company’s Annual General Meeting. The board is accountable to the Shareholders for the company’s activities and finances. The Shareholders are the residents or unit-holders, who hold Shares either on a one share per unit basis or in proportion to the size and/or number of the unit(s) they each hold. The company holds its own bank account, and must keep records of all receipts and expenditure. The company raises funds by levying subscription or other charges on the members (the unit-holders). The company must file annual accounts with Companies House and HMRC.
For some small properties there is so little routine maintenance that is may be easier for those matters to be arranged between the flat holders without involving the company. In such cases, the sole function of the company may be to hold the deeds of the property. In that case the company may have no income or expenditure and may be maintained as a “dormant company” under the Companies Acts. The company will still need to file an Annual Return and Accounts at Companies House, but the “Accounts” can be filed using a simple form that can be filed online at Companies House (Dormant Company Accounts).
A Property Management company is a private company limited by shares. A regular limited company, such as is used for running a business, is not suitable for this purpose. Property Companies must have Articles of Association specifically drawn up for the management of property with objects covering the specific property (identified by its address). There may also be provision for the acquisition of other property (such as an adjoining piece of land). The Articles must provide for the company to raise subscriptions or levies on the members to pay for the activities of the company, even if the company is initially intended to remain dormant.
Right To Manage
Where there is no ownership and no aim to acquire ownership of the common property a more suitable legal vehicle is a Right To Manage company, limited by guarantee, set up under the provisions of collective enfranchisement legislation, the most recent of which is the Commonhold and Leasehold Reform Act 2002.
Ordered Management will handle your Property Management Company Formation for just £ (including VAT) and provide the following documents on completion:
2 copies of Memorandum and Articles
First Board Minutes
Every company is obliged to keep a Statutory Register and to inform Companies House of any changes to the ownership or control of the company and any associated details. It is also a legal obligation to submit an Annual Return each year, and a set of Accounts (even if the company is dormant). Failure to fulfil these obligations can lead to heavy penalties and even to the company being struck off the Register and fines imposed on the Directors. Responsibility for these matters traditionally belonged to the Company Secretary. It is no longer a legal obligation for companies to appoint a Secretary but, if they don’t, they must make sure that someone still does the Secretary’s job. To ensure the job is done properly, why not trust it to experts?
To appoint Ordered Management to be your Company Secretary, select the Company Secretary option on the Order Form and leave it to us.