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Apartment Building

Share of the Freehold

Some flats are in buildings where the leaseholders collectively own the freehold.  In most cases a company owns the freehold and each leaseholder has a share in this company. The leases still exist and are essential to ensure that if any leaseholder misbehaves the other leaseholders can take action against them.

This company will look after the maintenance and repair of the building.  This is an arrangement which usually works well in practice but problems can arise if the lessees do not agree on what work is required.  It also relies upon volunteers to serve as directors, but in most cases they will appoint a managing agent to deal with maintenance.  The big advantage is that they can choose whatever agent they like, and if they fail to perform adequately they can be sacked and anew agent appointed. 


Another advantage is that if the leases need extending the company can arrange it without any premium being charged.  There will be legal fees but they should not be more than a few hundred pounds.

If there are four or fewer leaseholders the freehold may be registered in their joint names.  This has a disadvantage since the freehold needs  to be transferred at the Land Registry every time a flat changes hands, which incurs Land Registry fees and legal fees, and can be a big problem if this procedure is neglected and the seller cannot be located subsequently.


If the freehold is registered in the name of a company only a share in the company has to be transferred, which is much simpler.  The seller has to sign a share transfer and the buyer has to send it to the management company who will issue a new share certificate and enter the buyer's name on the company register.  No fee is payable unless the company wishes to levy one.  The company is usually limited by guarantee, so that the share holders have no liability other than lodging accounts at Companies House once a year. 

Agents sometimes advertise flats where there is a share in the freehold as "freehold flats", but this is incorrect as they are still leasehold properties.  Lenders will not lend on a flat if they consider it to be freehold.

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