Share of Freehold Meaning
Understand the different meanings of Share of Freehold, Leasehold and Freehold.
Understanding Share of Freehold
When you purchase a property with a "share of freehold," you are buying into a form of joint ownership. This means you own your apartment on a leasehold basis, as well as a share in the freehold of the building and the land it stands on. Essentially, this hybrid model grants you both the lease of your individual unit and a stake in the collective ownership of the entire property, including communal areas and the building's structure.
This ownership form contrasts with the traditional leasehold, where you own the right to use the property for a set period (often decades or centuries), and freehold, where you own the property and the land outright.
Types of Freehold Comparison Table
| Feature | Share of Freehold | Leasehold | Freehold |
| Ownership Duration | Own the property lease plus a share in the building's freehold, potentially indefinitely | Own the right to occupy the property for a fixed term (years/centuries) | Own the property and the land it sits on indefinitely |
| Control Over Property | High - owners have a say in management decisions and costs | Low - controlled by the freeholder/landlord | High - full control over the property |
| Service Charges | Decided among freehold sharers; often lower | Set by the landlord; can be high and increase | Not applicable |
| Ground Rent | Usually not applicable or minimal | Often applicable and can increase over time | Not applicable |
| Lease Extension | Easier and cheaper process; often free or minimal cost | Can be expensive and complex | Not applicable |
| Sale Process | Can sell freely, but must coordinate with other share of freeholders | Can sell leasehold interest; subject to lease terms | Can sell freely |
| Initial Costs | Potentially high due to the cost of buying into the freehold | Lower upfront costs but subject to lease extension costs | High due to outright purchase |
| Management Responsibilities | Shared among freehold sharers, potentially more hands-on | Handled by the landlord/freeholder, less direct control | Owner's responsibility |
FAQs
Q: Does share of freehold add value to a property?
A: Yes, especially if the existing lease is short. It can make the property more attractive to buyers, potentially increasing its value.
Q: Is share of freehold the same as leasehold?
A: No. While you still own your property on a lease, share of freehold gives you a stake in the building's freehold, offering more control over your home.
Q: Can I sell a share of freehold property?
A: Yes, you can sell your property with its share of the freehold. The process involves coordination with the other shareholders for a smooth transfer to the buyer.
Q: Do I still have to pay service charges with a share of freehold?
A: Yes, but you will have a say in how these charges are set, as you're part of the collective managing the building.
Q: Is a 999-year lease the same as a freehold?
A: No, a long lease offers protection against lease expiry but lacks the benefits and control that come with a freehold or share of freehold.
Q: How do I transfer share of freehold?
A: Transferring a share of freehold involves legal documentation to move the share from you and the current co-owners to the new owner.
Q: Can a freeholder refuse to sell the freehold?
A: If leaseholders qualify for collective enfranchisement, the freeholder cannot legally refuse to sell.
Pros and Cons
Pros:
- More Control: Shareholders have significant say in the management of the property, including setting service charges and making decisions about the building's upkeep.
- Financial Benefits: Potentially lower service charges and no ground rent, plus the possibility of extending your lease for free or at a low cost.
- Increased Attractiveness: Properties with a share of freehold can be more desirable to buyers, as they offer more security and control over the property.
Cons:
- Complexity: The process of acquiring a share of freehold can be complicated and requires cooperation among all the shareholders.
- Costs: Initial costs can be high, including legal fees and the price of purchasing the freehold itself.
- Management Responsibilities: Shareholders might need to form a management company, taking on the administrative duties of running the property.
Conclusion
Share of freehold presents an appealing option for those looking to have more control over their living environment and potentially save on costs in the long term. However, it's important to weigh the responsibilities and upfront costs against the benefits. Understanding the nuances of this ownership model can help you make an informed decision, ensuring that your home not only serves as a comfortable living space but also as a wise investment.