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Buying a flat with a share of freehold

Conveyancing clients often get confused when they are interested in buying a flat which has a ‘share of freehold’. The ‘share of freehold’ aspect is usually marketed heavily by the estate agents especially in London. The confusion sometimes comes from the fact that ‘freehold flats’ are generally not considered good security for lenders and, save in specific parts of the country, are unusual. A ‘share of freehold’ is sold with the leasehold flat – the leasehold interest is retained and is still the most valuable part but you also aquire a separate shared title or ownership in the freehold.

What is a ‘share of freehold’?

There are two basic set ups for the ownership of the freehold, the first is that the freehold is owned jointly by a number (up to four) of the flat owners in their personal names and the second is where a company is the owner of the freehold and each of the tenants hold a share or membership in that company. Therefore when you obtain a share in the freehold your name will either be noted on the title deeds or you will be issued a share in the company that owns the freehold. In either case you will then own a share in the freehold.

Why not remove the lease and create a freehold flat?

Because of the legal differences between freehold and leasehold titles it is never a good idea to merge the lease into the freehold title. This is because basically postive obligations e.g. to pay service charges and maintain your property would not easily pass from owner to owner in a freehold context. It can be done but the mechanisms are more complex than holding a leasehold title where these obligations run naturally with the land – that is to say they pass from owner to owner without any special steps being take on sale. Essentially therefore the communal obligations would simply fall apart if everyone held a freehold flat.

What are the advantages?

As we said agents often push the “share of freehold” as a positive and generally it is. A lease alone is a wasting asset – it becomes less valuable as time goes on as it gets shorter. Eventually you will need to extend the lease and normally if you have a share of freehold you will not be required to pay for this (although there are risks here and it is important to be advise on the purchase to ensure that there are no problems or barriers to this happening). It is therefore cheap and easy to achieve (see our article on extending your lease with a share of freehold). This can be a significant saving for example to extend a lease of around 70 years you would pay £15,000 and upwards to an independent landlord (based on a flat worth around £250,000).

You will also have greater control over how the maintenance on the building it dealt with – you are not at the whim of a independent landlord who may attempt to overcharge for repair costs – the tenants will generally be interested in keeping the property in good repair at the most economic cost.

If you are buying you will still need to consider whether the flat owners’ system, however basic, is in place for repair and that there are no problems or disputes between the tenants which could cause difficulties in maintaining or insuring the block in the future. Generally you would seek information from one of the other co-freeholders to verify any information provided by the seller on these points. The best advice is to speak to the other owners before you purchase to get a feel of how the block is run especially if it is a smaller block where you will need to interact with neighbours after you purchase.

Overall you generally find that self managed/owned blocks have a lower average service charge.

What are the disadvantages?

In smaller blocks there may be some obligations that one or more of the tenants need to keep on top of e.g. filing accounts and annual returns for the freehold company (there are fines if you file even dormant accounts late and if the company is struck off the cost of reinstatement can be expensive). You will need to ensure the block is insured and the premium is collected and paid each year.

Maintenance on an ad hoc basis can also cause spikes in the service charge if for example major works are required in any one year. This would be offset if there was a sinking or reserve fund set up which was paid into each year. Generally these arrangements are only put in place where there is a separate managing agent running the block – this is usual for larger blocks with a share of freehold but for smaller blocks the administration costs charged by a management company may be relatively expensive.

If the freehold is owned jointly in the personal names of the tenants it can also be difficult to get the other owners to sign the transfer of the freehold when the flat is sold. The Land Registry also require identification from each owner. This can be frustrating to arrange this when the flat is being sold and one of the co-owners is away!

However on balance the advantages generally far outweigh the disadvantages and the share of freehold will always help in the marketability of the flat in the future.

How we can help

We are specialists in dealing with leasehold sale and purchases with a share of freehold including lease extension work.

If you require information about our conveyancing service email Mark Sadler on 01708 757575  email mbs@ker.co.uk

Share of Freehold – Freehold flats – Short Lease – New Lease – Cost of Extending a lease with a share of freehold – Share of Freehold Extending Lease – Freehold Management Company Extending lease



13 comments on “Buying a flat with a share of freehold

Tim Post author

I live in a top floor masonite where I share the freehold with a couple down stairs.

The couple have been separated for the last 5 years, and the ex-husband name is to be removed from the freehold.

I’ve been asked by my neighbours to sign a new freehold document that only includes my name andthe ex-wife name on it. They have their own solicitor producing this documentation.

I have requested the following:

– Two copies that are signed, one for me and the other for the ex-wife.
– A letter from their solicitor stating the freehold needed to change from the couple, due to the separation.

Is this correct, or do I need a solicitor to file something on my behalf for the top property as this is a change in the freehold deed i.e. to the land registry?


Mark Sadler Post author

The transfer should be in form TR1.

The address and title number should match the freehold title only.

The transferor (box 4) should be you, your neighbour and your neighbour’s ex-husband.

The transferee (box 5) should be you and your neighbour.

Box 11 should be ticked or crossed to say “they are to hold the property on trust for themselves as tenants in common in equal shares”

Your address details should be correct.

If correct you can send it to the solicitors with a note to say “Please find enclosed the signed TR1 – this is sent to you on the strict understanding and your implied undertaking that (i) you send me a com-pleted copy when dated and (ii) you will update the Land Registry title and let me have a copy of the completed title when received.”

This is why lease extensions to 999 years are always recommended for share of freehold (as the free-hold title can easily become detached from the flat ownership).



I am in the process of buying a leasehold flat (Victorian house converted in to 4 flats ) and was wondering how difficult it would be to buy share of the freehold if the freehold also includes the converted building next door? (Also Victorian conversion into 4 flats) There is a management company who deals with the day to day, which is made up of all 8 leaseholders. Are there different rules to buying a share if the freehold goes across 2 buildings and would we have to wait 2 years before we could buy a share of freehold?

    Mark Sadler Post author

    The rules are complex but you do not need to wait provided you have 50% support from qualifying tenants ie 4 but preferably more in the two houses.


Hi, I’m a leaseholder in a block of 4 flats, where 2 of the other flats own the freehold. I’d like to buy into the freehold, is this difficult? Thanks, Jo

    Mark Sadler Post author

    You could ask the two who own the freehold if you can buy in. They may be happy to recoup some outlay. Otherwise to buy the freehold under the collective enfranchisement regime (which is your statutory right to buy the freehold) you need 50% of the long leaseholders in the block to force the sale so one other leaseholder would need to join you. Clearly however the other two owners can buy it back again! Best therfore to negotiate something if you can.


Hi … I purchased a g/floor flat conversion (one flat above me) as a leash old property. Subsequently the freeholder has ‘donated’ (no £ exchanged) the freehold of both flats to myself & upstairs neighbour. Does our Lease still stand & are we still protected by it in terms of sharing thw cost of any maintenance ? or do we need a new legal agreement?

    Mark Sadler Post author

    There is no automatic merger of the leasehold flats into the freehold. The leases still stand. Provided the leases are long (over 100 years) they should not need amending.


Hi Mark, I have a small query.

I own the top leasehold flat in a 5-flat building. I have some money (350 pounds) in a sinking fund on deposit with the freeholder (the other flats do not have any sinking fund contribution). My question is, what would happen to my sinking fund contribution as the freehold has being sold to another management company?

The departing freeholders have served a service charge bill (which is quite high due to disrepair issues) and ideally I would like to adjust this amount due to become lower by my sinking fund contribution (350 pounds). Can I actually do this (without making it a legal dispute)? And if so, do I need to send a letter?

The new freeholder management company have not yet set up any new sinking fund, but if (and when) they do, I would want that the other flats also contribute towards it (and not just me).

Many thanks in advance for your perspective.

Thanks, Sehar

    Mark Sadler Post author

    It is not automatically transferred but your conveyancing solicitors should have taken certain steps by either transferring the freehold title into your name (with the remaining freeholders) or transferring the share in the freehold company to you. You need to check that they have attended to this.


I hope you can help me understand if this is correct.
I am buying a flat as part of share of freehold.

I have noticed that the landlord is mentioned as one company,
and the managing company – as a different one.

I will get a share of the managing company, but how will this differ from the landlord and if I have equal rights to other members of the share of freehold

or if the flat that is marked as the landlord have more rights?
Thank you

    Mark Sadler Post author

    Quite often leases are set up with three parties. This is more common in larger buildings. These are:

    (1) The Landlord / Freeholder who owns the freehold title and essentially just collects the ground rent (which is income for him/her) and who would be entitled to any payment if the lease was extended. Sometimes the Landlord keeps the insurance obligation.
    (2) The Management Company – often residents owned who is responsible for the repair of the building and often the insurance also.
    (3) The flat owner/tenant.

    Leases are set up in this way so that the Landlord does not have very much to do or have any ongoing onerous obligations.

    Now to complicate matters sometimes the freehold can be purchased by the Management Company so there is one company who is both (1) and (2) but in your case the freehold was purchased by a separate company. Often this is because no all the tenants/flat owners need to participate in the purchase of the freehold and so it may be that not every owner has a share of freehold to pass on. Every flat owner should have a share in the management company. Your conveyancer should check all this for you because only those with a share in the freehold could get a ‘free’ lease extension.

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