New Companies House tool introduced for flat management company directors

Companies House receives complaints from residents living in shared buildings or properties such as flats every year.  These range from disputes between residents to the poor condition of carpets or paintwork in shared areas such as stairways. Companies House has no powers to deal with those complaints.

Flat management companies (FMCs) are often set up by residents to manage communal areas of a shared property and the overall condition of the building. The  directors and shareholders of the FMC are most often residents of the property in question.

As you would expect, these FMCs are required by law to file annual accounts with Companies House.  This can lead to confusion among some directors and shareholders over who’s responsible for submitting such accounts.

If you’re a flat management company director or thinking about setting one up, you need to know about your responsibilities to Companies House.

All company directors must be aware of their legal responsibilities both to Companies House and to their shareholders or members. This includes keeping information up to date and filing the necessary documents in a timely fashion.

You can use the Companies House Learning tool to better understand what is required of Flat Management Companies here although it does not replace independent legal or other professional advice.

It covers 5 parts:

  1. Companies House and your flat management company.
  2. Becoming a director.
  3. Keeping records.
  4. Filing accounts and types of accounts.
  5. Quiz to test your knowledge.

 

Alternatively, you can email or call Steve Thompson at MTM Legal to discuss your particular situation.

 

Flat management companies

A flat management company is set up to manage a property divided into a number of separate flats.

Each flat owner usually has a lease of their own flat. But they can also be a member of a management company that owns the freehold (or lease) of the entire building.

Each flat owner is a member of the company. This means the flat owners have their say in running the building.

If the members own shares in the company, they usually transfer their shares to the new owners when they sell their flat. It’s common practice to have this condition in the company’s articles of association. This makes sure that the limited company represents the interests of all the current flat owners. It also means the company remains a separate legal entity, regardless of who holds its shares.

Leaseholders can also set up an RTM limited company. This gives them the ‘right to manage’ the building they live in.

A limited company can also be set up to own and manage the common parts of a development, made up of separate units under ‘commonhold’. This type of company is called a commonhold association.

Property management law is different in Scotland.

 

Right to manage (RTM) companies

RTM companies allow long leaseholders in blocks of flats to take over the management of their building.

Leaseholders must set up a limited by guarantee company to carry out the management functions.

The constitutional rules of an English RTM company are set out in The RTM Companies (Model Articles) (England) Regulations 2009. These rules apply to all existing and proposed RTM companies.

RTM companies do not exist in Scotland, or Northern Ireland.

 

How to register (incorporate) a flat management or RTM company

You can register your company with MTM Legal who can assist you during the application process.  For info, please email us.

An RTM company must:

  • have a name ending ‘RTM Company Limited’ (or the Welsh equivalent)
  • be limited by guarantee

 

More information

RTM companies and commonhold associations were introduced under the Commonhold and Leasehold Reform Act 2002.

The Department of Communities and Local Government (DCLG) is responsible for RTM companies in England.

Call Steve Thompson at MTM Legal on 0161 835 2080 to discuss this or other Company Incorporation issues and your particular situation or contact him using the form below.