Share of freehold questions - confused

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  • andybenw
    replied
    I think a share in a company will be far preferable to owning directly on the deeds in a small block. Good luck.

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  • scot22
    replied
    Sounds like nirvana. We have owned a flat identical situation to yours. As has been said, it depends on owners as, of course, the other depends on freeholder. Over 20 years it has varied hoever, on balance, I prefer share of freehold. I'm sure your new neighbours will welcome someone like you. Best Wishes.

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  • sixunforced
    replied
    Thank you all for your comments and suggestions.
    I have looked into it a bit further, asked the vendor and found that it is indeed a block of 12 flats and each of them own a share of the freehold. Therefore, I will own 1/12th share of the freehold. They are all part of a Limited company formed back in 1999 to manage it with one person being the ‘chair’ who has been there since it was built. There is regular email contact between the 12 of them to discuss anything they need in relation to the building and management and everyone is really lovely, keen to look after the block and get involved.

    I guess as you've all alluded to it depends on how everyone co-operates together to run the building and maintain the process.

    Overall, I've been hearing that share of freehold is worth considering simply because the pros outweigh the cons, in that you have more control over the building you're in, the excess fees are less and you get to increase the lease for free to effectively creating more value on your property. I suppose as you mention Andy, that it all comes down to what the interests are of the other owners and that is hard to know for sure.

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  • andybenw
    replied
    I own a share of freehold (1 of 3 flats) directly on the title deeds. I can tell you it is an absolute nightmare as all people think about is their own flat and pushing their own interests. (and of course when others constantly do this you revert to that type yourself). I had the vain hope of things changing with new owners, but it's actually got worse as they do not get the concept of shared freehold and almost treat things as if it is 3 freehold flats.

    I am getting out next year (if Brexit allows) and reverting to freehold from now on, and I'd advise you to do the same.

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  • Lorimer
    replied
    Originally posted by sixunforced View Post
    At the same time though I'm reading reports of people saying it can be good but only if the others involved play their part in the agreement. If they do not co-operate then this can cause issues?
    This is a very difficult question. At the risk of sounding unpopular with the LLZ community, we prefer leasehold where there is a third party freeholder. We have found that if/when there were issues with how a third party freeholder was managing a development we had plenty of ways of addressing and remedying them via the application of leasehold law. Although all of those remedies are available in a shared freehold/RMC situation, we have found it much harder to tackle in these situations as we were essentially doing battle with our own neighbours/shared freeholders. Doing battle not only on leasehold law issues but also on company law issues.

    There is also the problem that in RMC/shared freehold situations, we have personally found huge reluctance among leaseholders to play an active part in the running of the development. In our experience, many leaseholders do not want to put in any effort at all but will jump all over the active members if/when something is done that they do not like or agree with.

    Whilst a shared freehold flat appears to be a better 'sell' than a leasehold flat with a third party freeholder, from our experience, we would choose the latter every time. If you are already sure that you want to buy this flat, I would advise you to ask questions about how the development is run, whether the shared freeholders use a RICS accredited managing agent and also what the Companies House listing for the freehold shows in terms of Officer take up ...

    Apologies in advance to anyone in the LLZ community that is offended by the above but I am speaking from our own personal (and sometimes painful) experience.

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  • Interlaken
    replied
    I am a leaseholder myself on a couple of properties and I manage a couple of blocks. Getting 12 owners to agree on anything if work needs doing is always a challenge as there are always differing views. and there are often 'non payers' to the fund who have to be chased.
    Think about acting on some of the points below.

    1. Ask if the 'freeholder' uses a management company which all 12 will pay towards or do they manage themselves?
    2. What do the common areas look like? Are they well kept and cleaned?
    3. How much does this cost per annum and does the price increase a lot?
    4. How much is in the 'sinking fund' towards repairs.
    5. Knock on a couple of doors and ask tenants/owners if there are any issues with the management.
    6. Ask to see some copies of recent AGM minutes.


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  • Gordon999
    replied
    1. Leasehold title means each flat is held on a 99 years or 125 years long term rental contract and leaseholder paying annual ground rent. to the freeholder. When the lease terms ends , the flat must be handed back to the freeholder. Leaseholders have no ownership in the building.

    2. Freehold title means having legal ownership of the property ( including the building and communal areas up to the boundary fence . )

    3. A freehold title can be owned by a ground rent investment company ( which is not good situation for the leaseholders )

    4. or owned by the leaseholders ( means owning a "share of the freehold company " ) and this is a better situation for the leaseholders.

    "Leasehold title" plus a "share of the freehold title" is definitely the superior choice compared to choosing only a "leasehold title ".

    Leave a comment:


  • sixunforced
    started a topic Share of freehold questions - confused

    Share of freehold questions - confused

    Not sure if this is the right place for this query but anyway, I'm a first time buyer and have been searching for a property for like two years now (not continuously but on and off and obv covid halted my search for a while). I found a really nice 2 bedroom flat for under £320,000 in a block of around 12 flats (I think) and my offer has been accepted, however the only issue that is concerning me is that it is a "share of freehold." From what I've read, overall this is a better option than an ordinary leasehold option as it gives you more control and autonomy about how the building is run etc. and also it slightly increases the overall value of the property, you can increase the length of lease plus it's easier to sell the property?

    At the same time though I'm reading reports of people saying it can be good but only if the others involved play their part in the agreement. If they do not co-operate then this can cause issues?

    So what is the verdict here really? Is share of freehold worth going for or should I stick with a leasehold flat (as most flats are leasehold)??

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