Owning a Share of the Freehold

[scraggy55]

I am buying a flat and will own a share of the Freehold. Can anyone please tell me in 'english' what that means? Also if I own a share of the Freehold, will I have to pay Ground Rent and Service Charges?

[Richard1966]

In very simple terms you are just a leaseholder and will pay ground rent and service charges as per your lease. The advantage is that you know you are not paying to some money grabbing corporate or private landlord who is trying to make a profit from you. All the leaseholders in your property or development are likely to also be shareholders in the freehold. Usually this is set up as a separate company. So you pay rent to a company you are a part shareholder of and therefore you have a say in the way the free holding company is run and how your money is spent. The reality especially if its been running like this for a while is that they will have an annual meeting where a number of the shareholders are elected by other residents to run the company on the shareholders behalf. It can be quite time communing depending on the size. I live in a complex of 44 properties with 44 shareholders in the company. We all pay service charges into a central pot and use this for ongoing maintenance and bills etc. However with increased legal responsibilities especially around quotes for major works, we also employ a managing agent to collect fees and arrange works on our behalf, This does cost but is worth it, especially if they need to chase any arrears. My daughter on the other hand lives in a block of three properties where there are just 3 shares in the company. They do it all themselves, but only every need to do a minimum of work as the building is made of stone and rarely needs repairs.