I HAVE A SHARE OF FREEHOLD- NO, YOU DON'T

I HAVE A SHARE OF FREEHOLD  is normally followed by “so that doesn’t apply to me”.

Sadly, no you don’t and  yes it does.

There “ain’t no thing” as share of freehold. At best it is a shorthand  invented by a blithering estate agent to explain something that they  hadn’t the will power to understand ( as they are watching on line Top Gear highlights or having highlights re done), and as a result buyers often believe that they have something which they don’t , a freehold flat*.

That creates a number of problems for flat owners from day to day expectations to serious expensive ones, including the rules and obligations they have to follow, that the statutory regulation still applies,  and the widespread problem of failing to appreciate the effect of a declining lease length.

The types of tenure are freehold leasehold and commonhold, and therefore a buyer will have a lease of their flat describing what they own and the respective rights and obligations of the owner to other owners and the freeholder. It is also therefore the thing that they own borrow on and sell.  A common thought is that “I am therefore, as SOF, the freeholder of my flat” when in fact that is extremely rarely the case.

The freehold is usually held by a company in which the flat owner will be a shareholder or member of, or along with owners who jointly own it, as a distinct legal entity the freeholder. So in simple terms, Mr A owns flat A, but the  freehold is owned by the flat owners and is therefore recorded as the freeholder is Mr A and Mr B and Mr C. You own the flat the freehold is owned by everybody else.

They are two distinct ownerships are not to be treated as buying the freehold and “having a lease for the flat as you need one” as I have heard it described. It is the principal asset you own and should be treated as such, and with the exception of complicated set ups the value of the freehold is minimal and its man benefit ( though not automatically free from problems  and abuses)is control of the block by a residents group.

When buying these particularly those not held by a company, that there is in place an adequate partnership agreement or declaration of trust which  sets out and governs the relationship between the freehold owners, especially with regard to voting and if disputes arise, such as where one flat owner   is in dispute with the others, and that everyone is around to sign the transfer.

In some cases not all flats participate in the freehold purchase and you will have to allow for and budget for the investigation of arrangements particularly if the company has a valuable asset such as lease extensions yet to be sold, other rental income  or a flat in the building  eg a staff flat, as in these cases in addition to the flat you can be asked to pay a sum to join the freeholders.

*I am omitting Tyneside Leases , other exceptions, and “cockups on the conveyancing front” and of course freehold flats where the freeholder owns the freehold and the flat is not subjexct to its own lease, titles have been ,erged or odditoes like wings in coverted house.