Q&As

A house is split into two flats with a company owning the freehold and the two leaseholders owning the company. What pitfalls might there be if the two leaseholds were in common ownership and the common owner of both leaseholds wanted to convert the building back into a single dwelling, discontinue the leasehold scheme and transfer the freehold from the company to itself?

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Published on LexisPSL on 16/05/2019

The following Property Q&A provides comprehensive and up to date legal information covering:

  • A house is split into two flats with a company owning the freehold and the two leaseholders owning the company. What pitfalls might there be if the two leaseholds were in common ownership and the common owner of both leaseholds wanted to convert the building back into a single dwelling, discontinue the leasehold scheme and transfer the freehold from the company to itself?

At the moment, the freehold interest in a property is owned by a company. There are leases of each of two flats which comprise that property. The leasehold interest in each flat is held by the person who owns the entirety of the shares of the company. It is not unusual for the lessees of residential leases in a block to own the shares of the company which owns the freehold interest in that block. There is no conceptual problem. The company is a separate entity from its shareholders. The lessees can owe obligations to that company under the lease as lessor. There is no question of merger. Lessee and lessor are different entities: even though the former have the ability to control the latter.

For as long as one person owns the leasehold interest in each flat and also the shares in the company ow

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