Share of freehold

Estate agents advertise flats as "share of freehold", but legally the buyer still owns a lease. What they also get is a share in the company (or, in some small buildings, a place among the individuals) that owns the freehold.

What it means in practice

• The leaseholders, through the company, are the landlord. They collect the service charge, insure and repair the building and enforce the leases against each other.
• The company's directors are usually volunteers from among the flat owners.
• The members can agree to extend leases, often for little or no premium, because they are dealing with themselves.

The same rules still apply

Being the landlord means the company must follow the same service-charge rules as any other landlord: proper demands, Section 20Section 20 consultationThe legal process of consulting leaseholders before carrying out works, or signing a contract of more than 12 months, that will cost any one leaseholder more than the set threshold. consultation, the 18-month ruleThe 18-month rule (Section 20B)The rule that a leaseholder doesn't have to pay service-charge costs that were incurred more than 18 months before they were demanded, unless they were warned in writing within that time that the costs had been incurred and would be charged. and holding the money on trust. Most disputes in share-of-freehold buildings are between neighbours who are also co-directors, so clear records and decisions matter even more.