Quizzes & Puzzles7 mins ago
What's the difference between freehold & leasehold
7 Answers
....and what is 'shared freehold' when you buy a flat?
Answers
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Freehold - you own the bricks of the house and the land it stands on.
Leasehold - you own the bricks of the house but not the land.
Shared freehold - the land under the flats is owned by all the owners of the flats. So each flat owner owns the bricks of the flat wholly, and the land it stands on jointly.
Leasehold - you own the bricks of the house but not the land.
Shared freehold - the land under the flats is owned by all the owners of the flats. So each flat owner owns the bricks of the flat wholly, and the land it stands on jointly.
As Wthel says but she forgot to say with Leashold you own the right to use the building for an agreed period of time you do not own the building itself.
There are pifalls with shared Freehold if the freehold is not wholly shared by all the flats on it. This can happen if one or more flats in the block does not agree to purchasing the Freehold for example. The main problem occurs with shorter leases, ie under 70 years when potential lenders are jumpy about lending so a lease extension may be needed. this can cost a few thousand depending on the years left to run.
There are pifalls with shared Freehold if the freehold is not wholly shared by all the flats on it. This can happen if one or more flats in the block does not agree to purchasing the Freehold for example. The main problem occurs with shorter leases, ie under 70 years when potential lenders are jumpy about lending so a lease extension may be needed. this can cost a few thousand depending on the years left to run.
Loosehead has correctly described leasehold.
However, with a shared freehold the freehold is in fact vested in a Limited Company specially set up for the purpose, and when you buy into a shared freehold this company issues a lease on your flat plus one share of the Limited Company. So assuming four flats in a block through the share you own one quarter of the entire freehold. The Limited Company is a management company for the block, so you have to make regular contributions to it for maintainance of the common parts and repairs. As you are a shareholder you have the right (duty) to attend the management company meetings and say how the block should be run. When your lease drops to 70 years or so the management company issues a new 99 year lease. The cost is not significant.
However, with a shared freehold the freehold is in fact vested in a Limited Company specially set up for the purpose, and when you buy into a shared freehold this company issues a lease on your flat plus one share of the Limited Company. So assuming four flats in a block through the share you own one quarter of the entire freehold. The Limited Company is a management company for the block, so you have to make regular contributions to it for maintainance of the common parts and repairs. As you are a shareholder you have the right (duty) to attend the management company meetings and say how the block should be run. When your lease drops to 70 years or so the management company issues a new 99 year lease. The cost is not significant.
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