Set up and run a flat management company

Set up a property management company ('Right to Manage')
Business: Limited Company

    You can set up a limited company – sometimes called a Right to Manage or flat management company – so residents can jointly run a property, eg a block of flats.

    Property management law is different in Scotland – see the Scottish government’’s guidance on property factors.

    Set up the limited company

    You must follow the normal process for setting up a private limited company.

    The Leasehold Advisory Service has detailed advice on setting up a company to manage property, including dealing with the landlord.

    Running the limited company

    All the residents who have agreed to be directors will have legal responsibilities.

    You must also send Companies House:

    • details about specific changes to the company when you make them, like adding or removing directors
    • the company’s annual accounts
    • an ‘annual return’ – confirming things like who the directors are and the company’s address

    Tax for the limited company

    You must send a Company Tax Return to HM Revenue & Customs (HMRC) no later than 12 months after the end of the company’s first financial year.

    After you do this, HMRC may decide to treat your company as ‘dormant’ – this means that they wouldn’’t expect your company to send Company Tax Returns for later years.

    They may do this is if your company does none of the following:

    • allow directors who aren’t residents or leaseholders to be appointed in its articles of association
    • does more than manage the property in the interests of shareholders
    • make a profit
    • need to pay more than £100 in Corporation Tax in a year
    • get any income from land
    • pay dividends or other payments from profits to shareholders
    • own any assets it is likely to dispose of which would give rise to a chargeable gain
    • make payments that need to be taxed

    They will write to the company if they decide to treat it as dormant.

    When the company must always send a Company Tax Return

    Your company must send a Company Tax Return every year if:

    • HMRC doesn’t write to confirm they think the company is dormant
    • the company starts doing any of the things in the list above, even if HMRC has previously said the company is dormant

    How to set up a flat management company to manage property on residents’ behalf and what you must do to run it legally