Under s34 of the Law of Property Act 1925, the maximum number of people who can jointly hold legal title to land in England and Wales is four. This presents a difficulty when a partnership of more than four people wishes to take a lease.
One solution is for the lease to be taken in the name of only four of the partners. That has some commercial disadvantages, not the least of which is that the partners concerned remain personally liable for the rent and other obligations under the lease for its entire duration (even after they have retired from the partnership). The second potential solution is for the lease to be taken in the name of a dormant company, acting as nominee for the partnership, with the partnership guaranteeing the company’s obligations to the landlord.
The latter is commonly encountered. But does it cause a problem with recovery of any VAT charged by the landlord on rent payable under the lease?
Source BKL
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