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Flat management

03 December 2013
Issue: 4431 / Categories: Forum & Feedback , Investments , Land & property

A flat management company owns the freehold of two houses divided into eight flats. Originally, six of the lessees owned shares in the company, but the other two have now also purchased shares. The lessees wish to extend their leases

A flat management company owns the freehold of two adjacent houses which are divided into eight flats that are let on 99-year leases from 1981.

Until recently only six of the lessees owned shares in the company. However the other two have now bought some of the shares from those six so that each lessee now owns the same number of shares.

There are no other shareholders. Because the leases now have only 67 years to run thought is being given to extending them. The lessees own both shares in the company and the leases so they would not expect to have to pay for lease extensions.

The cancellation of the old leases and the grant of new longer leases for no consideration would appear to at least create capital gains within the company and distributions to the shareholders.

Extra-statutory concession D39 would presumably not be...

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