The simple answer is almost always good because it gives you some control over the management of your building and its expenses.
But what exactly does 'a share of the freehold' mean? Well, firstly, don't confuse a share of the freehold with a freehold flat. They are not the same. Freehold flats are rare and problematic if all the necessary agreements are not in place.
What's more, most lenders won't touch them and they should therefore be avoided.
So the title (i.e. ownership of your flat) should always be leasehold and, in addition, you might own a share of the freehold title to the whole building. This way, and your neighbours will together be the landlord or freeholder, with hopefully the same desire to look after the common parts of the building in and efficient, economical way for all residents.
There are two main ways in which shared ownership of the freehold can be set up. The first, where a house has been converted into, say, two flats, is for the two flat owners to buy the freehold in their personal names and then whenever either flat is sold, they both have to transfer the title to the continuing owner and the new owner. This works when everyone cooperates, but if one of the owners is difficult or disappears, or there are several flats in a block where the freehold in everyone's personal names, there will be problems.
So the preferable and more common method is for the freehold to be owned by a limited company in which each flat owner has a share. When a flat is sold, their share is transferred to the new flat owner, and a new share certificate is issued. There will be some initial costs, and annual accounts and returns will be necessary, but these will be well worth the investment in the long run.
Philip Popeck is a partner at Curry Popeck, solicitors.
Call him on 020 8907 2000, or email him at philipp@curry popeck.com.
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