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Becoming a company director of a communally owned block.

12 replies

Sacada · 28/01/2022 10:01

Live in a block of apartments. The freehold is held by a company, in which we all have an equal share. One of the residents is a director of the company, but wants to give up the roll. The managing agents (who look after today-to-day management of the block) have asked for volunteers to take on the 'company director' role - saying that if none of the residents takes it on, the company would have to dissolve. I'm considering offering my services. What would it involve and are there potential downsides ? What would happen if none of the flat owners wants to become a director, and the company has to dissolve ?

OP posts:
CecilyTheWake · 28/01/2022 11:10

I used to do this. Ideally, you want at least two people to be directors, but if you volunteer then you might find someone else steps up too. I was one of five directors - initially I was the only one but once other people started to understand it better, they volunteered too.

The benefits of being a director are that you have a much closer relationship with the managing agent and can have more input and influence in how they run the block. You also have greater visibility over their operational activities which is really useful. So for example, if lots of people are complaining about cleaning of communal areas, you can present that to the managing agent and they should take action with the cleaning company.

We had a meeting with our property manager every three months or so where they would give us breakdowns of customer service stats, details about service fee payments and work on upcoming priorities for repairs etc that needed to be done. It was a really positive relationship and there were fewer complaints and issues than if the directors hadn’t been in place. We also achieved a lot of things like getting a natural equipment playground put in, helped push for changes to parking enforcement and planting of trees and shrubs.

The downside can be that some residents don’t understand what you do and think that you’re working for the managing agent. Attending the AGMs wasn’t much fun at the start because a few residents were determined to make a fuss but less keen to get involved.

In terms of workload, there can be as much or as little as you want, really. I had a full time job so I didn’t do as much as some of the others

I would definitely recommend it.

VodkaSlimline · 28/01/2022 11:46

I do this - it's a lot of work for me but my block is huge and complicated. It's interesting though and I get a lot of satisfaction from it! How many flats/shareholders does your block have? Do you have any nice/reasonable neighbours who you could rope in?

There's some good information here:
companieshouse.blog.gov.uk/2020/11/12/becoming-a-director-or-member-of-a-residents-management-company/

Potential downsides: it is a legal responsibility. Make sure you have directors & officers insurance.
www.gov.uk/guidance/being-a-company-director

EmmaH2022 · 28/01/2022 12:18

I did and I hated it. The other director was lovely, but still, it's a job with no pay and no reward.

But, I know people who have done it and had no issues. Is there an accountant?

I think if no one wants to do, you have to pay someone. That I would do again if I was paid properly for each hour's work.

burnoutbabe · 28/01/2022 12:20

i do it, me and another director who lives on site too are directors, we just approve bills form the property management company/quotes for work.

I sign off the accounts (as i am an accountant) but all prepared by the management company.

VodkaSlimline · 28/01/2022 12:31

There is a useful little online training course here - takes 30 minutes:
companieshouse.gomocentral.com/content/e6356b9e-e184-469d-be97-0642d3063f0e/web

Sacada · 28/01/2022 12:45

Thank you for the responses/links....most useful (It's only a small block, 16 flats).

OP posts:
burnoutbabe · 28/01/2022 12:54

as long as you are just a director of the company that owns the freehold and that company employees a professional property management company to do all the day to day running (issue bills/chase debts/get quotes/organise works) then its fine

My other half did it for a 4 flat block but that was run by them themselves. was a hassle, dealing with banking etc. but with our block of 27, i think we pay around £4kpa for the management company to manage it, so around £150 per flat, which seems good value.

I would NOT do it if there was not a professional management company employed to do things. If only as I'd not want to buy a flat in that block - would be big hassle when trying to buy it and getting legal answers out of the freeholder (ie the people living there).

senua · 28/01/2022 15:14

What would happen if none of the flat owners wants to become a director, and the company has to dissolve?
Good question! What would happen to your freehold.Shock

A company has to have at least one director. If you can persuade at least one other person to also become director then that means that you can resign/retire as director at any time (because there will still be at least one remaining). That may give you some comfort, knowing that you have an 'out' at any time.

Being a director is a position of responsibility so you need to protect yourself. As mentioned above, get Directors' & Officers' insurance. However, you pay the managing agents for their expertise so if you follow their professional guidance then you should be able to shift blame to them OK.Grin

TheOccupier · 29/01/2022 10:28

Found an article in The Times about what happens when a freehold company is dissolved/has no directors:

In English law the general rule is that all property must have an owner and the Crown is the ultimate owner of all land in the country. Whichever way it is wound up, the company’s real estate therefore automatically passes to the Crown (or the Duchies of Lancaster or Cornwall in certain parts of the country) under the principle known as bona vacantia. The Crown assumes the rights and obligations under the leases of any flats and its bona vacantia property is administered by the Government Legal Department, and it is quite common for the department to try to sell the freehold of blocks of flats to the leaseholders of any flats involved.

Sacada · 29/01/2022 14:18

Thank you. The other residents don't seem bothered about the communal company ceasing to exist - after reading this piece I'll certainly be stepping forward to make sure it continues.

OP posts:
VodkaSlimline · 30/01/2022 17:37

Great! Feel free to PM me for advice if you need it :)

CecilyTheWake · 30/01/2022 21:30

Likewise. I was rather thrown in at the deep end but I’m glad I did it and I think that our involvement benefited the development.

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