What does Share of Freehold mean?

In our last article, we discussed the differences between leasehold and freehold, but with so many different kinds of property ownership, it isn’t always that straightforward. 

In many cases, whilst individuals may have signed leasehold agreements, they may also each hold a share of the freehold for the property. For example, in a large block of flats, each of the 100 Leaseholders may hold individual leaseholds, whilst also owning shares of the company which owns the Freehold of the building.

The term ‘Share of freehold’, though, is deceiving, and can be presented in two ways. 

The first is that individual leaseholders are the freeholders. 

The second is that there is a freehold company that owns the freehold, and all leaseholders are members or shareholders.  

Why is this different from a regular freehold? 

A standard freehold owner’s rights will differ greatly from someone who has a share of freehold. The portion of the property that you own is still subject to a lease – so a share of freehold is much more similar to a leasehold than a freehold, despite what the name suggests. 

When does share of freehold become a problem? 

Share of freehold can look very different in different circumstances. For example, in a maisonette where you may only have 2 leaseholders, negotiating maintenance and discussing any other matters can be resolved quickly. However, in a large apartment block, it is likely that a managing agent may need to be involved to handle disputes or discussions relating to the freehold. 

Things to consider when entering a share of freehold – 

• It may be harder to sell than a regular freehold, due to any restrictions imposed by your fellow freeholders. 
• If contracts were not drafted properly, neighbours may not have any obligation to sign any transfer or agreement documents to allow you to make changes to your portion of the property.  
• If it is a true share of freehold (your name is on the title), you are responsible for organising the maintenance, coordinating this with other owners.

So what can you do? 

As the freeholder – 

In the case of large properties with multiple share of freeholders, it is best to establish a management company as the freeholder. This allows you to make changes to the shareholding of the company, without signatures from the rest of the shareholders.

As a share of freeholder – 

Ensure you consult a legal professional to fully understand your rights as a share of freeholder. 

The specifics and any ramifications of your contract must be fully understood before entering any agreements 

Disclaimer: The information  in this article does not constitute legal advice and is for general informational purposes only. Please contact a professional to obtain advice with respect to any particular legal matter.