THIS is one of the most common questions we are asked. It is a common misconception that if you purchase a property which benefits from a share in the Freehold then there is no longer a need for the lease. Perhaps this is because the notion of leasing a property from yourself seems odd and no monies are being paid to a third party landlord. However, as long as a property is divided into multiple units, the leases remain vital to the smooth running of the building and the leasehold interests and Freehold must be seen as separate.

Your lease is a legal document which tells you how long you’re allowed to occupy the property, the extent of your property within the building, what is deemed a common part, what rights you have in relation to the building and what rules and regulations you must abide by.

Each lease within the building should be granted on almost identical terms so that whilst you must abide by rules, you also benefit from other tenants in the building complying with the same. For example, a lease can stipulate the requirement to lay suitable floor coverings to limit noise from upper neighbours, not to keep pets without permission, not to make alterations without prior permission in writing and not to do or allow anything which may invalidate the building insurance etc.

Holding a share in the Freehold of a building is beneficial in having some control in maintaining the building, keeping costs down and potentially increasing the value of the flats within the building. In addition, most tenants who purchase their Freehold will immediately extend their leases to 999 years and dispose of the requirement to pay ground rent. However, it is important to understand the responsibilities involved in having a share in the Freehold.

It is vital that the co-Freeholders maintain good communication and keep on top of the legal requirements of being a Freeholder. We often come across buildings where the co-Freeholders are not aware that it is a legal requirement to have a Fire Risk Assessment (FRA) report for any communal areas in the building, no matter how small. A delay in commissioning the report can delay a sale – particularly if remedial works are required – and on a more serious note, the lack of a FRA has the potential to invalidate the Building Insurance Policy.

Maintaining good accounts and financial records is also very useful for day to day running of the building and is helpful when a leaseholder wants to sell his or her flat.

Many Freeholders choose to employ a reputable managing agent to oversee the management of the building and to ensure compliance with regulations.

Co-Freeholders should also be aware that the Freehold interest can be held in a company that is set up to purchase and own the Freehold with each leaseholder being a member of or holding a share in the company. Alternatively, it can be held by individual Leaseholders in their own names.

Just note, the Land Registry will only allow a maximum of four legal owners on the title for any property so where there are more than four leaseholders, four people will have to be allocated to hold the legal title on trust for themselves and the other Leaseholders, all of whom will have equal share in the beneficial interest of the Freehold. This position can be recorded by way of a Declaration of Trust.

If you need any further information regarding Share of Freehold arrangements, or any aspect of conveyancing, please contact Shauna West on sjw@deanwilson.co.uk or 01273 249245.