What does 'Share of Freehold' mean?
Share of Freehold
With all the charges to pay and restrictions to adhere to on a leasehold property it is not surprising that many leaseholders decide that they would like to own the freehold of the building in which they live. Under certain conditions they have the right to buy the freehold from the freeholder at a "reasonable" price. It's a lengthy procedure but increasing in popularity, especially as it has a perception of adding value or desirability to a property.
See Viewing Properties and Making Offers for full details on the characteristics of a Share of Freehold property.
Search Results for 'share of freehold' in How to Really Buy a Property
Chapter 14:
Viewing Properties and Making Offers
"... characteristics of a leasehold property;
What lease lengths affect a properties value;
How lease lengths can be extended;
Why share of freehold is not always attractive;
The agent's obligations if you make an offer.
- How the System Works -
It is an incredible thought that many of..."
"... most frequently used are:
First Time Buyer
Chain Free and Vacant Possession
Tenanted
Cash Purchasers Only
Repossession
Leasehold
share of freehold
Freehold
- First Time Buyer -
Originally this term arose to mean exactly what it said, "A buyer who has nothing to sell because..."
"... you'll need his permission. He will grant this in writing by either producing a new lease or by issuing a deed of variation
- share of freehold -
With all the charges to pay and restrictions to adhere to on a leasehold property it is not surprising that many Leaseholders decide..."
"...Any buyer should be aware that just because one flat in a building is share of freehold, it does not follow that they all are. If you take a building with four flats - A, B, C and D. Flats A, B and C may decide they want to buy the freehold but Flat D wants nothing to do with it. Once A, B and C have successfully purchased the freehold Flat D will still be a leaseholder but will now have to pay charges to the other three flats.
..."
"...The administrative side is carried out by setting up a company that is registered at Companies House. This is usually under the name of the building, e.g. 25 Free Street would be registered as 25 Free Street Ltd. Accounts must be submitted annually and so if a property has been share of freehold for a number of years you can check it's financial history online at Companies House to see if has been well managed.
..."
"... for a number of years you can check it's financial history online at Companies House to see if has been well managed.
The characteristics of a share of freehold are:
Owning Shares: If you buy a Share of Freehold property you will also be buying shares in the freehold company, 25 Free..."
"...Owning Shares: If you buy a share of freehold property you will also be buying shares in the freehold company, 25 Free Street Ltd in the example above. The shares will have been issued when the leaseholders bought out the freeholder. They may have simply split them equally (one third each in the example above) or unequally if there is a difference in floor space between the flats. To demonstrate this Flat A may be the top two floors at 25 Free Street while Flats B and C are only on one floor each. As such Flat A may get 50% of the shares and Flats B and C would get 25% each. While that is very nice for Flat A it would also mean that the owner would be responsible for 50% of the maintenance and repair costs!
..."
"...Lease Length and Value: Despite being share of freehold the flats in the above example are still leaseholders. The difference is that they are leaseholders to a freehold company and each one of them owns a share of that company. This means that if the leases are starting to look short on years they can simply agree amongst themselves to grant each other a fifty year extension for say £1 each! As such lease length and value have little connection in a share of freehold Property.
..."
"... length and value have little connection in a Share of Freehold Property.
Paying Ground Rent: The partners in a share of freehold may still decide to pay a nominal ground rent to the registered company that they own.
Paying a Service Charge: It is up to the partners in a share of freehold how..."
"...Paying a Service Charge: It is up to the partners in a share of freehold how they pay for the maintenance of the building. There is no right or wrong way but if the freehold company has no savings it would be wise for you to set up your own separate private account just in case the roof decides it has seen better days! The most popular methods for financing a share of freehold property are:
..."
"...Making Changes to the Property: Many people confuse share of freehold with total freedom! Someone who owns a share of freehold is still a leaseholder and must get the permission of the "freeholder" before making any substantial or structural changes to their property. This means agreement from all those in the building who have a percentage stake in the freehold company. As such staying friendly with your neighbours is far more important in a share of freehold situation than if you are a leaseholder! Once again any agreed changes must be spelt out either in a new lease or in a deed of variation.
..."
"... that is not insured, its all down to you to find the cash!
Some solicitors see Freehold properties as so much easier to deal with that they actually refuse to handle transactions involving leasehold or share of freehold properties.
- Making an Offer on a Property -
Once you have some..."
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Chapter 17:
The Property Buying Process in Theory
"... removed was a structural part of the property.
The Lease (Leasehold and share of freehold Only) - This comes from the vendor's solicitor and defines what the freeholder expects from you as a leaseholder. See Viewing Properties and Making Offers
Service Charge Accounts (Leasehold Only) - where..."
"...Share Certificate (share of freehold Only) - where the property you are buying is share of freehold you are essentially buying into a percentage of the freehold. The freehold company you are becoming part of is a Limited Company registered at Companies house. As such your part ownership of the freehold must be recognised legally and to do this all the other parties who own a percentage of that freehold must agree to issue you with shares.
..."
"... Approval (where applicable): From the vendor or, if he does not have them, from the local council.
The Lease (Leasehold and share of freehold only): From the freeholder or freehold company.
Service Charge Accounts (Leasehold only): From the managing agents or from the freeholder if he has..."
"... only): From the freeholder.
License to Assign (Leasehold only): From the freeholder.
Deeds of Variation (Leasehold and share of freehold only, where applicable): From the freeholder or the freehold company.
Share Certificate (Share of Freehold only): From the freehold company.
What Can Go..."
"... Variation (Leasehold and Share of Freehold only, where applicable): From the freeholder or the freehold company.
Share Certificate (share of freehold only): From the freehold company.
What Can Go Wrong
With paperwork to come from so many different sources it is little wonder that it can..."
"... knows where they are!) and so no ground rent payments have been made.
share of freehold Only: Some of the parties who own part of the freehold are absent and cannot be found so it is not possible to issue a share certificate
Share of Freehold Only: The company has been very badly run and..."
"... be found so it is not possible to issue a share certificate
share of freehold Only: The company has been very badly run and accounts are missing so it is not possible to see how much the running costs of the building have been
- Replying to Enquiries -
As described in Your Solicitor..."
"... or additions have been made to the property
Leasehold only: Who the managing agents are and who the freeholder is
share of freehold only: The last three years accounts
Share of Freehold only: A share certificate
Details of these documents can be found in Your Solicitor..."
"... only: Who the managing agents are and who the freeholder is
Share of Freehold only: The last three years accounts
share of freehold only: A share certificate
Details of these documents can be found in Your Solicitor above
What Can Go Wrong
The vendor has not instructed a..."
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Chapter 22:
Why Vendors are Poorly Prepared
"... one thing that can help with stress free selling it is to get a survey done on a property before selling.
In the case of a Leasehold or share of freehold property, a homebuyers survey
In the case of a Freehold property, a structural survey
The reason smart vendors do this is two..."
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