What does owning a share of the Freehold mean?

Clients who are in the course of purchasing a leasehold property are often as part of the transaction offered a share of the freehold and we are often asked to provide an explanation to this sometimes bewildering area of the Law.

The issue normally arises when a client is purchasing a flat, normally in a property which was previously a house which has been sub-divided.

Clients who purchase a house in the vast majority of cases acquire a freehold, whereas flats and apartments are granted leasehold status. If buying in a larger block of flats, the freehold will be retained by the original developer or usually by a freehold management company of which the individual flat owners can become shareholders. They can therefore take an active part in the management of the freehold to deal with issues such as the insurance of the building as a whole, the repair and maintenance of common parts and also deal with the funding and arrangement of more major projects as and when the need arises e.g. replacement of glazing, roof repairs or replacements or any structural work which remains the responsibility of the freehold or the freehold management company.

With sub-divided houses where there may be maximum of say 4 flats, it is normally the case that where there is a relatively low number of leaseholders (i.e. flat owners), it is not necessary in legal terms to go to the formality of establishing and running a freehold management company, but in these circumstances, in additional to acquiring the lease of the individual flat within the house, respective purchasers are often, as part of the deal with the seller, granted a share of the freehold together with the other leaseholders.

In short, with a sub-divided house you will find each individual flat owner will own their own lease and will also be a joint owner with the other leaseholders of the freehold property. Therefore all leaseholders will also assume responsibility for the maintenance and upkeep of the whole of the building and also what is referred to as the common parts i.e. hallways and lobbies which may not necessarily be part of the flats themselves but still obviously form a very important part of the building.

These shares of the freehold are then exchanged each time a leasehold flat is sold.

For further information in connection with this issue or any other issue in connection with the selling or buying of property, please contact UTK’s Property Team on 01267 237441 or email us on mail@utk.co.uk.