Share of Freehold
Joint freehold held with the other flat owners
Share of freehold describes a flat held on a long lease, whose leaseholders also own the building's freehold between them. The freehold is usually held by a company in which each flat holds one share. HM Land Registry records both the lease and the freehold title in England and Wales. The arrangement is uncommon in Northern Ireland and does not arise in Scotland, where flats are owned outright.
What This Means
You still buy a lease, and its terms still govern what you can do inside the flat. What changes is who your landlord is: you and your neighbours, through the freehold company. In a small block it may instead be in up to four leaseholders' joint names, with no company. Together you choose the managing agent, set the service charge and decide when the roof gets done. Being a shareholder can also mean director duties, including filing the company's accounts at Companies House. Nothing gets decided without cooperation, which stalls when shareholders disagree or a flat sits empty. This does not normally affect mortgage approval, buildings insurance or resale.
Practical Advice
- Ask your conveyancer to check that the lease, the freehold title and the company's filings all match up.
- Ask the freehold company for its service charge budget and the current block insurance schedule.
- Ask the seller how many shareholders there are, and whether any flat is empty or unsold.
- Ask the company to grant you a longer lease by agreement if the term is getting short.
Key Points
- A freehold company grants each flat a new 999-year lease at a peppercorn rent by agreement, at the cost of the paperwork rather than a statutory premium.
- A block of four flats holds the freehold in the owners' joint names, so a buyer's solicitor reads a trust deed instead of Companies House filings.
Additional Information
If the freehold company is struck off for unfiled accounts, its freehold passes to the Crown as bona vacantia. Restoring the company costs money and time, and a sale cannot complete until it is done.