01708 757575 mbs@ker.co.uk Enterprise House, 18 Eastern Road, Romford, Essex UK, RM1 3PJ
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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

 

 

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

Tim Post author
Reply

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?

Thanks

Mark Sadler Post author
Reply

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).

Reply

Hi,

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
    Reply

    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.

Jo
Reply

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
    Reply

    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.

Reply

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
    Reply

    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.

Reply

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
    Reply

    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.

Justas
Reply

Hi,
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
Justas

    Mark Sadler Post author
    Reply

    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.

Reply

Hi
I am in the process of purchasing a ground floor maisonette with a seller has owned a shared if freehold – 959 years lease from the management company, now I wanted to know if will I be incurring a service as a new owner and what are the responsibilities of the tenant who holds share of freehold

    Mark Sadler Post author
    Reply

    This is a simple conveyancing question which should be answered during the title investigation.

    Leases may be in different formats particularly in maisonettes / houses converted into a couple of flats. You can either have a lease which makes the tenant (flat owner) responsible for the repair of their part of the building i.e. the ground floor owner repairs the everything below the floor joists of the flat above including the foundations and the upper tenant everything above including the roof. These leases may or may not, depending on their drafting, require the other flat owner to contribute (usually) 50% of the cost of those repairs. The other common form of lease excludes the structure (mains walls roof and foundations) from the extent of the flats and retains this as part of the freehold – the freeholder is therefore responsible for repair (and often insurance) of these areas and the tenants contribute to the cost again usually on a 50:50 basis.

    Obviously if we are assisting you with the conveyancing we can be more specific on the advice.

Reply

Dear Mr Sadler,
I hope you can give us some advice on dealing with our neighbours who have caused a very substantial leak into our house from their adjoint property and are refusing to deal with the consequences. About two years ago they refused to pay the agreed half of the cost of the repairs of the joint areas. Our communication is broken down. What will be the next step? thank you

    Mark Sadler Post author
    Reply

    I do not deal with disputed matters but I would suggest that you tread carefully even if you feel you are in the right because a neighbour dispute will probably wipe more off the value of the property than the claim. Surly you have simply claimed for the damage on your insurance policy?

Reply

Hi
I own the share of freehold in a block of 4 flats. All freeholders contribute to the sinking fund on a monthly basis.
We are now in dispute with one of the 4 freeholders with regards to how the money should be used. The building needs repair works and only 3 out of the 4 owners/freeholders agree to the work being carried out and the sinking fund being used for this.

Do all freeholders need to be in complete agreement with how the fund is used or can a majority vote rule? Is there any legislation to govern this?

Thank you,

Reply

My daughter is buying a leasehold flat 999 years with share of freehold.
the other freeholders are refusing to sign until their leases are extended.
We are confused

    Mark Sadler Post author
    Reply

    If the other owners have shorter leases I think they are justifiably saying they will not transfer the share of freehold/extend the lease of the flat you are buying unless their leases are also extended. This is because your daughter could come into the freehold and make life difficult or refuse to extend the other leases when asked. This is a practical risk they are trying to avoid.

Reply

Hi Mark hope you’re well.
I am a leaseholder of a top floor maisonette in an Edwardian building where the ground floor unit is belong to the freeholder where it’s rented out via an estate agent. There is only 2 units in the building.
I hold a long lease (about 165 years) and there is no service charges involved as each of us manage our own unit and held our very own building insurance, and as for the ground rent it’s peppercorn rent.

I know normally you will need the other leaseholder to agree to buy the freehold from the landlord together or 51%, but in my case the ground floor flat owner is also the landlord. How do I go about to purchase the freehold / share of freehold? eg. extend the lease to 999 years

Thanks.

    Mark Sadler Post author
    Reply

    There is presently no way you can force the landlord to sell you a share of freehold and/or extend your lease to 999 years. You actually only need 50% in larger buildings but 100% in a block of 2 flats.

    The Law Commission may look at this issue in their review of leasehold law but I cannot see a simple answer to this.

    I would not think this makes a material difference in value as you have a long lease at nil rent.

Reply

Thanks Mark for your promptly reply.

In my lease it is stated that “The property demised is the maisonette on first floor of (my premises)together with the garden belonging there to as delineated of the plan:

“The roof including the loft and roof space of the building together with all joists and other structures supporting the same”

I might be wrong but it does sounds that the roof is belong to me?
In this case, will it be more difficult says if I want to convert the loft to a living space, knowing I will need approval and licence from the landlord?

    Mark Sadler Post author
    Reply

    I will not really be able to comment without seeing the whole lease because the description of the flat is one aspect and anything can be taken out of context. The roof is defined sometimes for repair purposes not to show what you own or do not own.

    If, however the roof and the structure around it belongs to you it will be easier to get consent as you are not required to buy the loft and roof structure from the landlord in the first place to carry out the work.

Reply

Hi Mark, we are first time buyers, in the process of purchasing a share of freehold flat. I just wondered, do we need to ask for confirmation of the length of the lease still? And to also ask the sellers to confirm as to how the responsibility of this works? Many thanks

    Mark Sadler Post author
    Reply

    Yes. The length of lease will be crucially important to your lender. It should ideally be 999 years but more than okay if over 100 years. Make sure also that all the other leases in the building are of the same length.

Reply

I have bought a flat in a block containing 30 flats in 2011. At the time the estate agent promoted the flat as it comes with a free share which attracted to buying the property. However, I have recently discovered that there is no free hold mention in my lease/title register. Unfortunately this was missed at the time of purchase. Do I still have any legal right to claim the free share.

    Mark Sadler Post author
    Reply

    The share of freehold would not be on the title deeds in a block of 30 flats. The freehold is usually owned by a company and each of the residents would own a share or be a member. Sometimes that share only passes if transferred (by a stock transfer form at the point of sale) but some company rules (set out in the Memorandum and Articles of Association found on the Companies House (beta) website) link the shares (if the company is limited by shares) or membership (if a company limited by guarantee) to the ownership of the flats so in effect the “share of freehold” you are looking for passed automatically at the point of purchase.

    Historically companies filed annual returns which listed all the shareholders – if you can see you name on any return since 2011 (again using the Companies House website) then there is evidence you have a share. If the actual share or membership certificate is lost you can usually obtain a replacement. If you cannot see your name on the list ask the freehold / management company who keeps the shareholders list. You may have to revert back to the solicitor who acted for you in the purchase at that point to sort this out.

Sam
Reply

Hi Mark – great to stumble across this and you answering Qs. We’re looking at buying a freehold flat in a block of two. The freeholder in the other flat has been uncontactable for the last 2 years – leaving aside any issues with contributions to building repairs, how does this impact the purchase – do they need to co-sign anything to allow it to go through?

    Mark Sadler Post author
    Reply

    Normally the freehold in a block of two will be held in joint names i.e. the owner of the upper and lower flat will be on the freehold.
    He/she will need to sign a transfer (TR1) to enable your purchase to go through but other than that his input is minimal. Two years does not seem like a long time so I assume they can be tracked down relatively easily. Remember you need to go through this again on resale so keep in touch.
    Always worth checking the lease length and ensure that both flats have the same length lease and are both long (ideally 999 years but anything over 100 years).

Reply

Hi Mark, very grateful to you for running this site, I am currently in the process of buying the freehold of a block of four flats, together with one other owner. My solicitor is mounting up costs and I now realise that even if we get the freehold, there is still more work to pay out for such as land registration of the freehold. My main concern is, the reason I’m doing this is to improve the saleability of the flat, however myself and the other buyer have no arrangement or knowledge of how to collect the money for costs from the other two flats and it alarms me that I will have to payout first and claim costs back. I have been really nieve, I thought we’d have a fund to put into. How do I make sure the other guy pays half for the building insurance for example? It now looks like I’ve made the property less desirable if I try and sell it.

    Mark Sadler Post author
    Reply

    There are a number of issues here. The solicitor should have provided you with an estimate of costs at the beginning. Whilst I appreciate the collective enfranchisement process may not run in a linear way you should have been given a ball park figure for a relatively straightforward matter with details of the costs or hourly rate for the more unusual steps which may need to be taken. If you are not happy that you had sufficient information from the start you may have a complaint. But did you read the information on costs carefully?
    The second point is that generally you should have a participation agreement between you and the other owner about how you pay towards these costs.
    The third point is that being a freehold owner is not always as easy at it seems. This is why it is often better with a small block to get all owners on board rather than just 50% because you now have the issue of running the building between the two of you. This however does give you more control and is generally a benefit overall.
    It is difficult to comment further without the specific details.

Reply

Hi Mark,
I stumbled across this and thought it would be worthwhile sending a message. I live in an Edwardian purpose built marionette (ground floor) together with the lady upstairs we own a share of the freehold.

The garden is 120foot she has a provision in her lease over the 1st 60foot but I have a provision in my lease of a right to use and enjoy it – This garden has been informally divided but over the years the fence has blown down.
When we bought the freehold in 2009 this included the remaining 60 foot of garden (derelict land).

Our leases are down to 60 years and we need to both surrender the current ones and have new leases drawn up. However we can not come to any agreement because she says this 1st 60foot is hers and that I only have rights to the bottom section which is open (no fences and totally derelict.

1st question: as we own the freehold land this lease sits on & I have a provision in my lease to “use & enjoy it” do I have shared rights to the 1st 60 foot?

She refuses to adhere to the covenants of her lease and wont carry out maintenance to the property, it needs painting & refuses to pay for any new fences (old ones have blown down).
Do I have any rights to carry out these works clearing the freehold land at the bottom and erecting fences? can I send her half the bill? do I have any rights to extend my lease without her signature? she is making my life extremely difficult & I am worried as the leases are so low.

Thank you,
Suzy

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Hi Mark,

I own a flat in a building of 4 and also own 25% of the freehold as a director. One of the 4 flats is let out to a tenant that we have had repeated issues with (excessive noise, rubbish, violating the terms of the tenancy etc). As one of the directors do I have any powers to deal with the problem (aside from contacting the council etc)?
Any help much appreciated etc.

Kind regards
Andrew

Reply

Hi Mark,
I’m pleased to have found your website!
I have a question concerning a flat myself and my husband are buying.
The flat has a lease of 125 years but also has 49% share of freehold which will be updated added on the title register as the freeholder is selling the flat and she had her own flat below .

The leasehold , ( we are going through it still has her as the landlord with the normal convenants of the lease etc )

However there is a ground rent of £150 per year, insurance also £150 per year which is fine , but was confused that we have to pay ground rent if we have a share of the freehold ?

The property consists of 2 flats , the top flat we are purchasing off the lady who currently has the whole freehold but once we purchase it we would have the 49% in our names on the title deed.
There are no service charges.

If you have any info regarding the ground rent query that would be great.

Also, the lady selling the leasehold with 49% freehold is the landlady on the lease contract.

I’m confused that if we will have this share of freehold why would the lease have her as a landlady ?

I hope I’ve made sense, thanks in advance .

Kind regards
Maggie

Thanks in advance

Reply

Hi Mark
A friend of mine lives in a leasehold flat in a block of 12. The freehold is up for sale and about 9 flats are buying into the freehold. She has been told that if she buys a share of the freehold and then decides to sell her property, any prospective purchase would be unable to get a mortgage and would need to be a cash purchaser. Is this correct?

    Mark Sadler Post author
    Reply

    No. Please do not confuse a share of freehold with a freehold flat (which is unmortgageable). See

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Is the purchase of buying the freehold based on the valuation of your flat? 4 of us are buying a share of freehold, but one of the leaseholders wants all 4 of us to go 50% each although 2 of the flats are biggar and the valuation is more then mine. Is this fair?

    Mark Sadler Post author
    Reply

    This is a matter for negotiation. Usually the payment is linked to the value of the flat in some way but your valuer can advise on this and what the split may be. I assume you mean 25% each.

Reply

Hi Mark,

I’ve had an offer accepted on a flat which is share of freehold and has 67 years left on the lease. What is the implications of having a short list, how do my solicitors go about getting it extended and what sort of costs are attached to this?

Thank you

Reply

Should payment for bins and CCTV repairs be divided equally among 11 residents all owning the freehold I am asked for£107 and another resident £11 97 pence thank you for an answe in advance

Reply

In a block of 34 flats, my wife owns 1 flat in her name, one other jointly with her son, one with her mum, is she eligible to buy the freehold fur to the multiple ownership ? I.e if I own three flats you cannot buy the freehold? Further if chose not to buy the freehold does it matter much we have a 990 years lease on all three Flats! Are there any other negative implications remaining as leaseholder, property is self managed by leaseholders

Reply

I am looking at buying a property. The property is marketed as freehold. My solicitor has said that the the property is a freehold house and the upper floor of the house is let out to a tenant under a long lease which is registered. The seller therefore owns the freehold building and occupies the remaining part of the building being the ground floor. There is no lease granted for the ground floor and the who building is registered under a freehold title. Am I buying a freehold flat or the freehold building?

    Mark Sadler Post author
    Reply

    You are buying a freehold building subject to part being let on a long lease. Whilst in theory this is not a problem from a legal perspective (in relation to enforcement of covenants etc) many lenders will not understand this and think it is a freehold flat. You may need to create a lease of the lower flat to make it easier to mortgage or sell in the future. It is relatively easy to do this and mirror the terms of the existing lease.

Reply

Hi Mark, I am quite impressed with the amount of queries you have answered for everyone with great clarity.

My query is – I am interested in a share of freehold masionette (ground floor) with no service charges or ground rent and lease is 991 years. the estate agent has advised that i will own 50% of the freehold. the garden area surrounding the property will be solely my responsibility. there is a first floor masionette owned by someone else so just 2 masionettes in 1 building.

Is this a good property to move forward with?
Anything i should look out for or check before proceeding, please kindly help to guide.

many thanks

William Akram
Reply

HI Mark
I am the Leaseholder of the first floor flat in a converted house which consists of only 2 flats.
The Ground Floor maisonette is owned by the freeholder so in effect the Leaseholder of the Ground Floor maisonette is also the freeholder for both his and my flat.
(1) Is there anyway in which I can force him to sell me a share of the freehold?
(2) Also my lease term remaining is 74 years and on enquiring a few months ago the freeholder was willing to increase my lease term to 99years but nothing beyond this. Do I have a case for him to extend for 74+99 years = 173 years

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Hi Mark
Many thanks for your response which has been extremely helpful
One last query I have is as follows:

Due to my kids getting older I would like to build a dormer room in the loft space of my first floor flat (after acquiring the necessary planning consent from the Local Authority). Could you kindly advise whether?

(1) I would need consent for this dormer room in the loft space from the Freeholder?
(2) Whether I would need to pay the freeholder any money (due to an increase in the market value of the flat) in order for me to develop the loft space and in effect increase the size of the flat from a 2 bed to a 3 bed?

Reply

Hi Mark

My landlord has offered to sell me the freehold to my flat only, (I live in the upstairs of a block of 2 flats), not the freehold for the whole property and has given me a higher price for the freehold for both flats. Is this correct and would it be a good move, (I have read the issues with freehold flats and lenders)?

Regards

Nick D

    Mark Sadler Post author
    Reply

    It may be a good idea to buy the whole freehold but buying part or splitting the freehold is certainly not a good idea and would make your property difficult to sell.

Reply

Hi Mark,

I am looking at buying a 1st Floor flat on a shared freehold basis, the only other share being held by the person owning the ground floor flat below. The issue is that the ground floor flat has access to the loft via a hatch which is obviously in the 1st floor flat. Is there any way that the freehold can be re-written so access to the loft is only available for the owner of the first floor flat, and what sort of cost would it involve?

    Mark Sadler Post author
    Reply

    Could be expensive as the owner of the ground floor flat may want paying to amend his lease plus you will end up paying all the legal costs. If the plan is to develop the roof space I assume the ground floor owner will realise this.

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Hi Mark
I am looking to buy a flat in a converted house of 4 flats. The current owners all have a 25% share of the freehold. The lease on my potential flat is 54 years and it seems other flat owners may have already extended their leases. If I wanted to extend my lease would I have to compensate the other joint freeholders financially in any way ? And would it cost me much more than usual solicitors fees to do this ? Thank you

    Mark Sadler Post author
    Reply

    I would seriously consider making the lease extension a condition of the purchase (to be sorted out by the seller). Removes all risk of you having to pay any compensation or otherwise horse trade with the other freehold owners.

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Hi Mark – so great to come across this and find you engaging with the replies! I am a leaseholder and the freehold consists of my flat and my upstairs neighbour. We have separate entrances etc (purpose built but not a block of apartments) but its the same building and so part of the same freehold. The freeholder is keen to sell (there is no income or anything for them) however for various reasons I am not keen. Can the other leaseholder proceed without me and become the freeholder? I had hoped/expected that they could not if I did not participate.

    Mark Sadler Post author
    Reply

    Yes he/she can purchase the freehold if you do not participate. In fact is is a quirk of 2 flat buildings that even if the right of first refusal notices are sent it needs both of you to buy together but either one of you can refuse to co-operate with the other and offer to buy the freehold when the notice period has expired direct with the landlord.

sapna
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Hi Mark.. im so happy i found your article we’re just a bit confused. We’ve just put an offer on a flat (property has 2 flats in it) and its been accepted. It was advertised as share of freehold but looking at the land registry its says the property is leasehold. We questioned them about the owner of the property but they didnt seem to know much at the viewing. If the flat is indeed leasehold (not sure how many years btw) do you think we can renegotiate our offer as its not actually share of freehold? Thanks in advance 🙂

    Mark Sadler Post author
    Reply

    Share of freehold means you get the normal leasehold title (and this is where 99% of the value should be and what your mortgage lender will lend on) plus a share of the freehold which is normally either your name on the freehold title with the other owner of the adjacent flat or a share in the company that owns that freehold. I suppose to be clearer you should be sold “leasehold with a share of freehold” but everyone seems to just refer to “share of freehold”.

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I’m stuck as to whether I should sell my 2bed ground floor garden flat in W9. I’ve just bought a share of the freehold with the other flats for a 999 year extension. I’m selling it for 500k. Does this seem like a good price?

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Hello Mark,

I am purchasing a 25 % share of a leasehold property. I have been asked to sign a TR1 form.
I am the buyer, and I am buying alone, it is not a joint purchase.
I have refused to sign this form as I read on the land registry website that section 12 should only be signed by the transferor (seller)
Am I wrong in refusing to sign this form?

    Mark Sadler Post author
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    You are normally required to sign this to confirm that you agree that everyone has a 25% share moving forward rather than as the seller/transferor so yes you should sign it.

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Having recently gone through the process of buying a flat with a share of freehold, I can attest to its advantages. The ability to extend the lease without additional costs was a significant benefit, and having control over the building’s maintenance was reassuring. However, there were some obligations to keep on top of, like filing accounts for the freehold company. Overall, the share of freehold added value to the property and made it more marketable. If considering this option, it’s essential to interact with other co-freeholders to understand how the block is managed.

    Mark Sadler Post author
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    I agree that successfully managed share of freehold blocks rely on human interaction and co-operation rather than reliance on the wording of the leases or other documents. These documents are however required as a fall back position in the case of dispute and of course to satisfy lenders.

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Great blog – and super greatful for the informative replies.

I have a share of freehold with the upstairs neighbour (two flats in a converted Victorian townhouse). We had to buy it from the crown, as the entity that owned it no longer existed. The lease is with a company that also no longer exists (it was the developer of the flat – who has since dissolved the company). Who now owns the lease? Do we need to get a new lease if we want to extend it – currently at 110 years.

    Mark Sadler Post author
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    If you have gone to the expense of buying the freehold from the Crown (and that would have been expensive) then it would make sense to in essence remove the value from the freehold you have purchased and grant yourself (and your neighbour) very long leases (999 years) at a peppercorn.

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