Share of Freehold Explained

If you're shopping for flats in the UK, especially in converted Victorian or Edwardian houses split into 2-4 units, you'll come across share of freehold. It's not the same as freehold, not the same as leasehold, and not the same as commonhold. It's a hybrid: you own your individual flat on a long lease AND you collectively own the freehold of the whole building with your neighbours. For most buyers, it's better than traditional leasehold, but only if it's set up properly.

What share of freehold actually is

In a share of freehold property, two ownership layers exist:

• Your individual flat, owned by you, leasehold, on a long lease (often 999 years).
• The freehold of the building, owned jointly by all the flat-owners, usually through a small private limited company in which each flat-owner is a director and shareholder. Sometimes called the 'Management Company' or 'Freehold Company'.

Why share of freehold beats traditional leasehold

Several practical advantages:

• You and your neighbours control everything. No outside freeholder charging ground rent, dictating service charges, or refusing lease extensions. The flat-owners make collective decisions.
• Lease extensions are effectively free. When the lease shortens, the flat-owners (who collectively own the freehold) can just agree to extend their own leases. No formal lease extension premium needed.
• Ground rent is usually a peppercorn. Why would you charge yourselves real ground rent? Almost all share-of-freehold setups have nominal ground rent only.
• Service charges reflect actual costs. No commercial freeholder marking up insurance or maintenance, costs go straight from suppliers to the joint freehold account.
• Decisions on works are democratic. Re-roofing, redecoration, communal upgrades are agreed collectively rather than imposed by a freeholder.

Where share of freehold is most common

You'll typically see it in:

• Converted houses split into 2-4 flats (the classic London Victorian conversion). Most natural fit, small enough for the flat-owners to manage collectively without it becoming a chore.
• Small purpose-built blocks of 4-12 flats where the original developer either sold the freehold to the residents or allowed them to buy it under collective enfranchisement.
• Buildings where the leaseholders bought the freehold from the original landlord through the right to collective enfranchisement (granted by the Leasehold Reform Act 1993, strengthened by the 2024 reforms).

The downsides, what to be aware of

It's not all upside:

• Shared responsibility = shared disagreements. If a neighbour refuses to contribute to repairs, or can't afford a major works bill, the situation gets awkward.
• You have to take part. Someone has to keep the freehold company filed at Companies House, file accounts, and chair meetings. In a 4-flat block, that someone might be you.
• Selling can be slightly slower. Conveyancing on share of freehold involves checking BOTH the lease AND the freehold company structure, more paperwork than a straight leasehold.
• If a neighbour fails to maintain their flat, there's no outside freeholder to enforce. You have to work it out collectively or take legal action against your neighbour, which is unpleasant.

What to check before buying a share-of-freehold flat

Before you offer, your conveyancing solicitor should confirm:

• Is the freehold structure formally set up? There should be a private limited company at Companies House with all current flat-owners as directors. If it's a verbal arrangement, that's a red flag.
• Are the company's accounts up to date? Filed on time at Companies House, ideally with a reserve fund showing balanced finances.
• What's the lease length on YOUR flat? Even in share of freehold, the lease still ticks down. Many older share-of-freehold flats need lease extension when buyers arrive.
• Is there a maintenance plan? Roof, exterior decoration, drainage, these are big-ticket items that need to be planned and funded.
• Are there current disagreements between flat-owners? If neighbours are at war with each other, you're walking into a difficult situation.

Buying out the freeholder, how flat-owners GET share of freehold

If you're already a leaseholder in a building with a separate freeholder, you have a statutory right (under the Leasehold Reform Act 1993) to buy the freehold collectively with your neighbours, called collective enfranchisement. Conditions:

• At least 50% of the leaseholders in the building must want to participate.
• At least two-thirds of the units must be held on long leases (over 21 years).
• The building must be at least two-thirds residential (commercial elements like ground-floor shops are OK up to a point).
• Each participating leaseholder must have owned their flat for at least two years.

Share of freehold vs commonhold

Commonhold is a separate legal structure introduced in 2002 to replace leasehold for flats. Each flat is owned outright (no lease, no freeholder), with shared parts managed by a Commonhold Association of all the flat owners.

In practice, commonhold barely got used (developers preferred selling leasehold and keeping freeholds as assets). There's a government push to make commonhold the default for new blocks of flats. For buyers in 2026, you'll see commonhold occasionally but share of freehold remains the more common improved alternative to traditional leasehold.

Mortgages on share-of-freehold flats

Most UK lenders treat share of freehold the same as a leasehold flat, they lend on the leasehold portion. The freehold company directorship is not part of the loan security. Lenders DO usually want to see:

• Lease length over 70-85 years remaining (varies by lender).
• Sound freehold company structure with up-to-date filings.
• No major works imminent that aren't funded.
• Building insurance in place for the whole building (usually arranged by the freehold company).

Share of freehold is the unsung win of UK flat-buying. Done well, it gives you most of the control of full freehold ownership with most of the practical reality of leasehold. If you're weighing up a share-of-freehold flat, the keys to a good outcome are: a properly set-up freehold company, a long lease on your flat, and neighbours you can work with. Debbie at DS Financial finds lenders who are comfortable with share-of-freehold structures and steers clients away from any setups where the freehold company isn't properly running.

General information, not financial advice. Your home may be repossessed if you do not keep up repayments on your mortgage.

Sources: GOV.UK, Leasehold property, Leasehold Reform Act 1993, Collective enfranchisement, HomeOwners Alliance, Share of freehold.