Freehold Management Company Services
Expert support for every freehold management company, from initial setup and director guidance to ongoing block management, transparent accounts, and deed of covenant administration. We help leaseholders and directors resolve freehold management company problems and run their building with confidence.
What Is a Freehold Management Company?
A freehold management company is a corporate entity that owns the freehold interest in a building containing multiple flats and is responsible for the management and upkeep of the communal areas, structure, and shared services. In most cases, the leaseholders within the building are also shareholders or members of the company, giving them a direct say in how the building is managed. This structure is commonly referred to as a share of freehold management company.
Unlike a building owned by a third-party freeholder, a freehold management company puts the residents in control. The company holds the freehold title, and the directors, elected from among the leaseholders, make decisions about maintenance, insurance, budgets, and the appointment of contractors or a professional block management agent. This model is widespread across converted Victorian houses, purpose-built apartment blocks, and developments where the freehold has been acquired through collective enfranchisement.
While the share of freehold model offers significant advantages, it also comes with important legal and financial responsibilities. Directors must ensure the company complies with Companies House requirements, maintains proper freehold management company accounts, collects service charges, and fulfils all freeholder responsibilities under the lease and relevant legislation.
Setting Up a Freehold Management Company
Setting up a freehold management company requires careful planning and attention to legal detail. Whether you are forming a new company to acquire the freehold or taking over an existing structure, the following steps are essential to ensure the company is properly constituted and compliant from day one.
- Incorporate the company at Companies House as a private company limited by guarantee or by shares, with articles of association tailored to property management
- Register all qualifying leaseholders as members or shareholders of the company
- Appoint at least two directors from among the leaseholders to oversee the company operations
- Open a dedicated bank account for freehold management company funds, keeping service charge money separate from personal finances
- Establish a service charge budget covering insurance, maintenance, management fees, and reserve fund contributions
- Arrange buildings insurance for the structure and communal areas of the property
- Put in place a deed of covenant to bind incoming leaseholders to the company obligations
Many groups of leaseholders find the process of setting up a freehold management company daunting. At Block, we guide you through every step, from company formation to appointing a service charge structure that works for your building. We can also recommend specialist solicitors for the freehold acquisition itself.
Director Responsibilities and Company Accounts
Directors of a freehold management company carry significant legal obligations under the Companies Act 2006 and leasehold legislation. Understanding these freehold management company responsibilities is essential for anyone serving as a director, whether you are a volunteer leaseholder or a professionally appointed officer.
Core Director Duties
- Act in the best interests of the company and its members at all times
- Exercise reasonable care, skill, and diligence in decision-making
- Avoid conflicts of interest, particularly when appointing contractors
- Ensure the company files its annual confirmation statement and accounts at Companies House
- Maintain proper financial records and ensure service charges are applied correctly
- Comply with all freeholder responsibilities under the lease and statute
Freehold Management Company Accounts
- Prepare annual service charge accounts showing all income and expenditure
- Distribute certified accounts to every leaseholder within six months of the financial year end
- Maintain a separate bank account for freehold management company funds
- Hold service charge monies in a designated trust account as required by legislation
- Keep accurate records of reserve fund contributions and expenditure
- File statutory accounts at Companies House within the required deadline
The financial obligations of running a freehold management company can be complex, particularly when dealing with arrears, major works expenditure, or disputed charges. Our leasehold management team handles all financial administration on behalf of your company, ensuring freehold management company accounts are accurate, transparent, and compliant with legislation.
Deed of Covenant and Compliance Requirements
A deed of covenant freehold management company document is a legally binding agreement that an incoming leaseholder signs when purchasing a flat in a building managed by a freehold management company. The deed binds the new owner to the terms of the company's memorandum and articles of association, and ensures they accept responsibility for paying service charges, complying with the lease covenants, and participating in the management company as a member or shareholder.
Without a properly executed deed of covenant, the freehold management company may struggle to enforce obligations against the new owner. This can lead to significant freehold management company problems, including difficulties collecting service charges, enforcing building rules, and maintaining the company's membership register. It is therefore essential that the deed of covenant process is managed professionally as part of every property transaction.
At Block, we administer the deed of covenant process on behalf of our client companies, working directly with the solicitors acting for the buyer and seller. We ensure that every new leaseholder is properly registered as a member, that the company's records are updated promptly, and that the compliance requirements are met without delay.
- Deed of covenant drafting and review for every property sale within the building
- Coordination with buyer and seller solicitors to ensure timely execution
- Company register updates reflecting new members and shareholding changes
- Management pack preparation containing accounts, insurance, and compliance documents
- Ongoing compliance with Companies House filing and company law obligations
Common Freehold Management Company Problems and How to Avoid Them
Freehold management company problems are more common than many leaseholders realise. Without professional support, volunteer directors can find themselves overwhelmed by the legal, financial, and administrative responsibilities of running a company. Here are the most frequent issues we encounter and how our block management service resolves them.
Companies House Strikes
Failing to file the annual confirmation statement or accounts at Companies House can lead to the company being struck off the register. This causes the freehold to become ownerless, creating serious problems for every flat owner. We handle all Companies House filings on your behalf.
Service Charge Arrears
When leaseholders fail to pay their service charge contributions, the company cannot fund essential maintenance and insurance. Our arrears management process includes formal demand letters, payment plans, and referral for legal recovery when necessary.
Director Disputes
Disagreements between directors can paralyse decision-making and lead to the building being neglected. As an independent managing agent, we provide impartial professional advice and facilitate board meetings to keep the company functioning smoothly.
Insurance Lapses
Allowing buildings insurance to lapse puts every leaseholder at risk and breaches most mortgage conditions. We arrange competitive block insurance and manage the renewal process to ensure continuous cover.
Maintenance Neglect
Without a planned maintenance programme, buildings deteriorate and repair costs escalate. We create long-term maintenance plans and manage both reactive and planned works through our network of vetted contractors.
Non-Compliance with Legislation
Freehold management companies must comply with fire safety, health and safety, and building safety legislation. Non-compliance can result in fines, prosecution, and personal liability for directors. We ensure full regulatory compliance.
If your freehold management company is experiencing any of these issues, our team can step in quickly. Contact us for a free assessment of your building's management needs.
Share of Freehold vs Residents Management Company
It is important to understand the distinction between a share of freehold management company and a residents management company (RMC). While both structures give leaseholders a degree of control over their building, they differ in ownership and legal standing.
In a share of freehold arrangement, the freehold management company owns the freehold title and the leaseholders are shareholders or members of that company. This gives them ultimate control over the building, including the power to grant lease extensions, vary lease terms (with appropriate consent), and appoint or dismiss the managing agent. By contrast, a residents management company typically manages the building under a management lease or agreement but does not own the freehold itself, which may be retained by a developer, investor, or housing association.
A third route to leaseholder control is the Right to Manage (RTM), which allows qualifying leaseholders to take over the management functions of their building without purchasing the freehold. Each model has its own advantages and we can advise on which is most appropriate for your circumstances.
Share of Freehold
- Leaseholders collectively own the freehold through the company
- Full control over lease extensions and management decisions
- Company directors are elected from among the leaseholders
- Must maintain Companies House filings and company accounts
- Responsibility for all freeholder obligations including building safety
Residents Management Company
- Manages the building but does not own the freehold
- Management authority derived from a management lease or agreement
- May have limited power over lease extensions and variations
- Still requires Companies House compliance and proper accounts
- Often set up by the original developer as part of the building sale
Frequently Asked Questions About Freehold Management Companies
How much does a freehold management pack cost?
A freehold management pack typically costs between 200 and 400 pounds, depending on the solicitor or managing agent preparing it. The pack is usually required when a flat within a freehold management company building is being sold. It contains key documents such as the company accounts, service charge budget, insurance certificate, memorandum and articles of association, and any deed of covenant requirements. At Block, we prepare management packs promptly to avoid delays in the conveyancing process.
Can a freehold property have a management company?
Yes, a freehold property can absolutely have a management company. In fact, most blocks of flats where the leaseholders collectively own the freehold are managed through a freehold management company. This company, usually a private company limited by guarantee or by shares, is responsible for maintaining the communal areas, arranging buildings insurance, collecting service charges, and ensuring the building complies with all relevant legislation. Whether you hold a share of freehold or the freehold is held by a separate company, a professional managing agent can be appointed to handle the day-to-day responsibilities.
What is a freehold management fee?
A freehold management fee is the charge levied by a professional managing agent for administering the freehold management company and the building it oversees. Freehold management company fees typically range from 150 to 500 pounds per unit per year, depending on the size and complexity of the building and the scope of services provided. The fee is usually included within the annual service charge budget and covers tasks such as financial administration, building maintenance coordination, compliance management, company secretarial duties, and communication with leaseholders and directors.
What happens if a freehold company goes bust?
If a freehold management company becomes insolvent or is struck off the Companies House register, serious problems can arise. The freehold interest in the land may become ownerless and vest in the Crown under the bona vacantia rules. This can make it extremely difficult to sell individual flats, arrange buildings insurance, or enforce lease covenants. To prevent this, directors must ensure the company files its annual confirmation statement and accounts at Companies House on time and maintains a healthy financial position. If a company has already been struck off, it may be possible to apply for restoration to the register through an administrative or court process.
Who pays for a management pack?
The cost of a management pack is typically paid by the leaseholder who is selling their flat. This is because the pack is required by the buyer solicitor as part of the conveyancing process, and the obligation to provide the information generally falls on the seller. Some leases and deeds of covenant specify that the outgoing leaseholder must cover the cost of preparing the pack, including any deed of covenant assignment fee. The exact cost and who bears it should be set out in the lease or the freehold management company articles.
What are the drawbacks of freehold?
While owning a share of freehold offers significant benefits including greater control and no external freeholder, there are notable drawbacks. Directors of the freehold management company take on legal responsibilities including Companies House filing obligations, building safety compliance, and financial oversight. Disputes between shareholders can be difficult to resolve without professional mediation. Volunteer directors may lack the expertise to handle complex maintenance, insurance, or legal matters. Service charge collection from non-paying leaseholders can be challenging without professional support. These drawbacks can be mitigated by appointing a professional block management company to handle the day-to-day administration.
Professional Support for Your Freehold Management Company
Whether you are setting up a freehold management company, dealing with freehold management company problems, or looking for a professional managing agent to take over the day-to-day running of your building, Block Management Company is here to help. We provide comprehensive block management services tailored to the needs of freehold management companies across the UK, backed by transparent freehold management company fees and dedicated property managers.