Q: I am buying a flat that has a ‘share of freehold’. What does this phrase mean? Is there a lease to it or are there any hidden costs to the final buying price?
A: purchasing a property that has a share of *freehold means that you will acquire shared ownership of the freehold entitlement related to the building/property. Furthermore, this will give you a leasehold interest in each/individual flat.
Generally, freehold ownership is registered under a certain company’s name. The owners. Which are more than one in most cases, are all shareholders in the property. Alternatively, a freehold title can hold multiple names of up to four individuals in registration.
For tenants, renting/leasing a property having a share of freehold does not, in any respect, give them an entitlement to not abide by the lease/standard terms of the lease. If the lease doesn’t allow any alterations without the landlord’s consent, any infringement of the terms of the lease could result in penalization.
A leasehold withering value to it with the passage of time hence, making it a risky and less profitable aspect of real estate. The key advantage of the share of freehold on the owners’ end is the ability to grant themselves a 999 years’ lease, thereby making a safe and wise investment. Owning a share of the freehold also means that the lessees can have greater control of the day-to-day management and maintenance of the property.
Owning a share of freehold has its own set of risk factor. For example, poor administration involved in the management of a building and Poor management, in general, can lead to a range of problems.
It’s important to note that acquiring a share of freehold is generally a wise investment but doing so does come with its own predicaments. A good solicitor would help you ensure your share of freehold dream purchase does not turn into a poorly managed building and investment nightmare.
*Permanent and absolute tenure of a land /property with the freedom to dispose at will.
