Glossary
Freehold company
Also called: freehold management company, nominee purchaser company, share of freehold company
A company owned by the leaseholders of a building that owns the building's freehold, and so is the landlord under the flat leases.
Leaseholders usually form a freehold company to buy the freehold, either by agreement with the freeholder or by using the legal right of collective enfranchisementCollective enfranchisementThe legal right of qualifying leaseholders of flats in England and Wales to join together and buy the freehold of their building, even if the freeholder doesn't want to sell.. Once the purchase completes, the company becomes the landlord.
How it differs from an RTM company
| Freehold company | RTM company | |
|---|---|---|
| Owns the building | Yes | No |
| Receives ground rent | Yes, if any is payable | No, it stays with the landlord |
| Can grant lease extensions | Yes | No |
| Can enforce leaseholders' promises | Yes, as landlord | Yes, but it can never forfeit a lease |
| Has to buy anything | Yes, the freehold | No |
Running it
The company has the same service-charge duties as any landlord, plus the usual company duties: filings, accounts and meetings. Its articles (and any agreement between the members) decide how it is run, so read them early.
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