Share of Freehold: A Clear Guide for Property Buyers
If you’ve ever dipped a toe into the UK property market, especially when looking at flats, you’ve probably come across the term share of freehold. It sounds straightforward, but what it actually means can get a little murky.
Is it the same as freehold? Is it better than leasehold? How does it actually work? In this guide, we’ll unpack the concept in plain English, clear up the confusion, and walk through the pros, cons, and everything in between.
First Things First: What Is Share of Freehold?
When you own a share of the freehold, you’re still a leaseholder of your individual flat. However, unlike a typical leasehold, you also co-own the freehold to the building with the other flat owners.
Think of it like this: the lease gives you the right to live in and maintain your flat, while your share in the freehold gives you a say in how the building as a whole is managed. This includes things like structural repairs and choosing the building’s insurance provider.
In most cases, the freehold is either:
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Held jointly by the flat owners through a limited company, where each gets a share
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Owned directly by the individuals named on the freehold title, often as “tenants in common”
Either way, you’re part of the group making decisions about the wider building.
How It Differs From Freehold or Leasehold
This is where people often get caught out. A freehold house is simple: you own everything, including the property and the land it stands on, and you take full responsibility for its upkeep. There is no lease involved.
Leasehold is more limited. You buy the right to live in the property for a set number of years, usually 99 or 125, but someone else owns the building and land. That person or company is the freeholder. You usually pay them ground rent and service charges, and the shorter your lease becomes, the more difficult and expensive it is to extend.
To understand more about the difference between freehold and leasehold read our article here.
Share of freehold is a hybrid. You still have a lease, but you're also one of the people who owns the freehold. That shifts the dynamic significantly. Instead of being subject to an outside landlord, you’re now part of the group that makes the key decisions.
So, How Does Share of Freehold Work Day-to-Day?
Once leaseholders acquire the freehold, either through a legal process called collective enfranchisement or by purchasing it directly, they take over responsibility for the building.
In smaller blocks, residents often manage things informally, while in other cases they set up a formal company to oversee building management. Decisions about repairs, insurance, and service charges are then made either as a group or by elected directors.
You’ll be involved in things like:
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Choosing an insurance policy for the building
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Handling repairs and maintenance of communal areas
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Setting and collecting the annual service charge
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Deciding when major works are required
In many cases, residents will appoint a professional managing agent to take care of these tasks. Even so, the key point is that you and your fellow leaseholders are the ones in charge.
Why Do People Opt For Share of Freehold?
The main reason is control. Leaseholders are often frustrated by external landlords who charge excessive fees, delay maintenance, or make decisions with little transparency.
By owning a share of the freehold, you gain a voice in how the building is run. That means you can:
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Extend your lease more easily and without paying a large premium
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Remove ground rent entirely
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Agree on how much to spend on maintenance and improvements
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Choose a managing agent (or manage the building yourselves)
In short, you’re no longer reliant on someone else to make good decisions about the place you live in.
The Upsides (and a Few Downsides)
There’s plenty to like about share of freehold. For many flat owners, it represents a more stable, cost-effective and empowering arrangement.
Some of the key advantages include:
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The ability to extend your lease to 999 years with minimal legal fees
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No ground rent, since you essentially own the land already
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Transparent service charges, agreed among residents
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Greater say over how your building is maintained
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Improved saleability, as many buyers view it as a premium feature
However, this model does come with added responsibility. You will need to take part in decisions that affect the building, and if communication breaks down between residents, it can be frustrating. In some cases, people disagree on how much to spend, what works should be prioritised, or who should manage the property.
If the freehold is owned through a company, there are also some legal obligations to consider. For example, directors must file accounts and ensure the company remains compliant.
Can You Extend the Lease?
Yes, and this is one of the most appealing features. While standard leasehold extensions can be lengthy, costly, and legally complex, share of freehold owners can usually agree to extend their leases between themselves.
Extending to 999 years is common practice. Although you’ll still need a solicitor to handle the legal paperwork and update the Land Registry, there is typically no premium to pay, which can save tens of thousands of pounds compared to the leasehold process.
Does It Add Value?
In many cases, yes. Flats with share of freehold are often more appealing to buyers. This is largely because they come with fewer ongoing costs, easier lease extensions, and more control over how the building is managed.
Buyers may also appreciate the fact that there is no external landlord, and that the lease is often already extended. These factors can make your property easier to sell and potentially increase its market value.
That said, poorly managed freeholds can have the opposite effect. If there is infighting between owners or no structure in place for handling repairs and admin, potential buyers may be put off. Ultimately, it’s not just the ownership model that matters, but how it is implemented.
Service Charges and Ground Rent
Even with a share of freehold, service charges still apply. After all, buildings require upkeep. You’ll still need to cover the cost of things like communal area maintenance, cleaning, insurance, and repairs.
The main difference is that the people paying the service charge are the same people deciding what it gets spent on. This tends to result in fairer, more transparent budgeting, and it usually removes the profit motive that external landlords might have.
Ground rent is typically abolished. Since leaseholders now own the freehold, there is no longer a need to pay rent on land they collectively own. Most agreements reduce the rent to zero or what’s legally known as a peppercorn amount.
What Happens If You Want to Sell?
Selling a flat with share of freehold is fairly straightforward. The sale includes both your leasehold flat and your share of the freehold.
If the freehold is held through a company, your share in that company is transferred to the buyer. If it is held directly in your name along with the other owners, the new buyer’s name will be added to the title in place of yours.
A solicitor will handle the legal details, and while the process is slightly more involved than selling a standard leasehold, it’s familiar territory for most conveyancers.
Can You Get a Mortgage on a Share of Freehold Property?
Yes, you can. Most mortgage lenders are happy to lend on share of freehold flats, provided the lease is long enough (typically at least 85 years remaining).
In fact, some lenders prefer this type of ownership because it often signals better management and reduced risk of costly lease extensions later on. That said, lenders may want to see evidence that the building is being properly maintained. For example, if the freehold is held through a company, they might ask to see its accounts or details of the service charge.
Keeping things well-documented and transparent makes the mortgage process much smoother.
Is It Right for You?
That really depends on your circumstances. If you value autonomy and want more influence over how your building is run, share of freehold could be a great fit.
It tends to work well in smaller blocks or converted houses where communication is straightforward and owners are on the same page. But if you prefer a hands-off approach or want minimal involvement in property management, this structure might not suit you.
Before committing, ask a few important questions:
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Has the lease already been extended?
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Is there a company in place, and is it active?
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Are service charges fair and up to date?
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Do the co-owners communicate well and make decisions efficiently?
The answers will tell you a lot about whether the arrangement is well run and likely to suit your needs.
So, What’s the Verdict?
Share of freehold provides a smart alternative to traditional leasehold ownership. It offers more control, often reduces long-term costs, and can enhance the value of your flat. At the same time, it comes with shared responsibilities, and its success largely depends on good communication between owners.
If you're considering buying a share of freehold property or thinking about converting your leasehold building, make sure to seek advice from a solicitor with experience in this area. A well-structured setup can provide long-term benefits that make the additional effort worthwhile.
