Non-motoring > Share of Freehold and Lease Legal Questions
Thread Author: zippy Replies: 6

 Share of Freehold and Lease - zippy
Miss Z is interested in a 1980's purpose built flat (quite nice with 2 beds and 2 reception rooms).

It's on a side road in a parkland setting so not crammed in and not overlooked, save for the squirrels.

The flat has a 999 lease from c1985 and a share of the freehold.

I thought you could have either one or the other?

Also, I seem to recall, that there could be problems if you owned the freehold to a flat?

This is an area that I know nothing about so would welcome your input.

 Share of Freehold and Lease - Manatee
It's a way through the problem that a freehold is a piece of ground and the flat is part of a building on that piece of ground.

If they just jointly owned the freehold that would probably make it difficult or impossible to define the actual flat (part of the building) she owns. So the occupiers are joint freeholders and also lessors, and individually lessees of a particular flat. Both freeholders/lessors and lessees have obligations. The lease should also define the tenants rights and obligations in relation to common areas, access to their own flats, and so on.

 Share of Freehold and Lease - Terry
The UK splits ownership of blocks of flats between the individual flats owned by the leaseholder, and the block as a whole owned by a separate company.

Some aspects of this have come in for a lot of criticism recently but most leases define those parts of the building which are the responsibility of individual flat owners - basically inside.

The responsibility of the freeholder is typically external maintenance, roofs, repairs, grounds maintenance, block insurance etc. These are paid for through a service charge levelled on all flat owners - usually equal amounts or flexed depending on the size of the flats.

There is often also a ground rent payable to the owner of the block freehold.

The original rationale for separating the freehold from individual leases was that the freeholder could ensure that each flat met its obigations under the lease - paid their share of service charge, no loud music, no pets, etc etc.

Increasingly ownership of the freehold is seen as just an income stream for an investor, and freeholds are traded as other property. Many are purchased by leaseholders in blocks of flats - it gives them the right to extend leases which may originally have been 99 years, change the terms of the lease, and the ground rent is no longer payable.

You need to read the lease very carefully - I once was part way through the purchase of a buy to let flat. Only on reading the lease carefully was it apparent that the flat could not be sublet!!
 Share of Freehold and Lease - zippy
Thanks both.

Last edited by: zippy on Wed 18 Aug 21 at 01:04
 Share of Freehold and Lease - Netsur
If it includes a 'share of the freehold' then the flat probably comes with one share in the company which owns the freehold and effectively the owners of the individual flats, collectively own the freehold through the company.

That way the flat owners decide (collectively) how their block is run, when it should be decorated, what improvements should be carried out, what rules should be applied and whether to self-manage or let a professional firm do it on their behalf and pay a higher service charge for the peace of mind.

One interesting point about this is the provision of wall mounted car chargers. Should the block install one or one per flat and how should the electricity be billed? But the conversation can be started now because everyone can get involved in the discussion and probably in time, they will 'have skin in the game'.

 Share of Freehold and Lease - Terry
It is not that simple - not all leaseholders who are shareholders in the management company holding the freehold will have similar views or interests.

The management company cannot impose changes to individual leases - there is a legal process or company law process involved.

Leaseholders may well have very different views - eg:

- an owner occupier may be concerned to have a desirable place to live, a buy to let owner with tenants may seek to maximise their return

- a young working owner may be more willing to spend to increase the value of the property, a pensioner may want to minimise expenditure

Car chargers may be a good example of the conflict. Non-driving pensioner will not want to spend the money. Buy to let owner may be happy to spend as it makes the property a more marketable asset. Owner with green aspirations or EV driver will definitely want to invest in on-site charging.
 Share of Freehold and Lease - Manatee
>>It is not that simple - not all leaseholders who are shareholders in the management company holding the freehold will have similar views or interests.

The members vote on proposals like expensive maintenance or improvements.

The difficulty can arise when it comes to getting the money out of a member who is vehemently opposed even though they are obliged to pay their share.
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