Jump to content
House Price Crash Forum
TheWolf

Share Of Freehold / Leasehold

Recommended Posts

Hi all,

I am planning to purchase aflat in central London in the near future. How do I distinguish share of freehold and leashold flats.

E.g. when comparing 'share of freehold' and 999 years leasehold, which is worth more?

Where can I read more about it?

Thank you,

Ambrose

Share this post


Link to post
Share on other sites
Hi all,

I am planning to purchase aflat in central London in the near future. How do I distinguish share of freehold and leashold flats.

E.g. when comparing 'share of freehold' and 999 years leasehold, which is worth more?

Where can I read more about it?

Thank you,

Ambrose

Dont buy a flat. If you really must the share of freehold is preferable as you have a say in who is running the building, what works are done and who by. The leasehold option is the usual way with a management company running the service charge and normally the charges are higher with (allegedly) sometimes a "cut" being taken by the management company of any major works that are carried out. Freehold flats are almost unmortgagable and should not be touched with a barge pole.

Share this post


Link to post
Share on other sites
Dont buy a flat. If you really must the share of freehold is preferable as you have a say in who is running the building, what works are done and who by. The leasehold option is the usual way with a management company running the service charge and normally the charges are higher with (allegedly) sometimes a "cut" being taken by the management company of any major works that are carried out. Freehold flats are almost unmortgagable and should not be touched with a barge pole.

Thank you for your reply. Could you give me reasons why I should not buy a flat? (I live in Central London) What would be your best advice for someone working in the city/canary wharf?

Share this post


Link to post
Share on other sites
Freehold flats are almost unmortgagable and should not be touched with a barge pole.

Apologies to TheWolf for sidetracking a little....

Dear The Conveyancer, excuse my ignorance.... why is a freeholding such an undesirable thing for a flat, when the opposite is true for a house?

thanks,

Share this post


Link to post
Share on other sites
Apologies to TheWolf for sidetracking a little....

Dear The Conveyancer, excuse my ignorance.... why is a freeholding such an undesirable thing for a flat, when the opposite is true for a house?

thanks,

If there is a management company appointed they can just get on with the work that is needed and charge the leaseholders. With freehold flats you need to get the other owners in a block to agree to work and then try to get their share out of them. If they say they dont want the work done it is hard to make them and usually involves expensive Court action. Therefore you could be living on the top floor with the roof leaking on you all night but your fellow owners lower down in the block refuse to chip in to have the roof repaired. Not many lenders will go for freehold flats.

Why dont buy a flat - The service charges are expensive and quite often when you work it out you would be cheaper with a bigger mortgage and no service charge and ground rent. You have to ask the landlord for consent to change anything, you are too close to your neighbours, there can be all sort of rules and regulations about what you can and cant do in your own home, you can be hit with excess service charge accounts for major works you werent expecting. Basically you lose a load of control and end up having to pay extra cash for people to run the block. If you can buy a freehold property (but not a flat)

Share this post


Link to post
Share on other sites
If there is a management company appointed they can just get on with the work that is needed and charge the leaseholders. With freehold flats you need to get the other owners in a block to agree to work and then try to get their share out of them. If they say they dont want the work done it is hard to make them and usually involves expensive Court action. Therefore you could be living on the top floor with the roof leaking on you all night but your fellow owners lower down in the block refuse to chip in to have the roof repaired. Not many lenders will go for freehold flats.

Why dont buy a flat - The service charges are expensive and quite often when you work it out you would be cheaper with a bigger mortgage and no service charge and ground rent. You have to ask the landlord for consent to change anything, you are too close to your neighbours, there can be all sort of rules and regulations about what you can and cant do in your own home, you can be hit with excess service charge accounts for major works you werent expecting. Basically you lose a load of control and end up having to pay extra cash for people to run the block. If you can buy a freehold property (but not a flat)

Thank you again for your reply. I believe that some flats i.e. houses converted into flats would not need any service charge. but I agree houses give you a lot more freedom. Unfortunately, can't quite afford a house in central london yet!

Share this post


Link to post
Share on other sites
If there is a management company appointed they can just get on with the work that is needed and charge the leaseholders. With freehold flats you need to get the other owners in a block to agree to work and then try to get their share out of them. If they say they dont want the work done it is hard to make them and usually involves expensive Court action. Therefore you could be living on the top floor with the roof leaking on you all night but your fellow owners lower down in the block refuse to chip in to have the roof repaired. Not many lenders will go for freehold flats.

Thank you - what you've said makes perfect sense to me now.

Share this post


Link to post
Share on other sites

The Conveyancer is right about not touching freehold flats. Leases have many provisions regarding the relationships between neighbouring/adjoining leasehold premises. these mechanisms do not exist automatically between freehold flats.

NB: Remember though there is a distinction between a freehold flat and a flat that has a share of the freehold.

Share this post


Link to post
Share on other sites

Assuming the individual flats are leasehold, the question that matters is who owns the freehold on the building.

If it's the leaseholders each owning a proportional share, then all's more-or-less well. You (collectively) get to decide what needs doing, and your interests are aligned with the common good of your living environment.

If it's a reputable freeholder with a legitimate business (e.g. a housebuilder who built or converted the building) you should be OK: they've got a reputation to lose if they do anything too evil, so it's not in their interest either, and you're (somewhat) protected by the legal right of first refusal if they sell the freehold.

The case to beware of is where the freeholder is a company you've never heard of, maybe a random generated "word" registered as a legal entity and part of a shady and unclear network. Be very careful you're not signing up for unlimited liability to someone who has nothing to lose by raising your service charge from £1k to £50k on a whim.

Share this post


Link to post
Share on other sites

If a flat is listed as being freehold and has a service charge does this mean that it must be a share of freehold flat rather than an actual freehold flat? Also, if a flat is a share of freehold flat does this mean that it should have a lease as well?

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   322 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.