Share of freehold means you own a lease of your flat and also have a stake in the building’s freehold.
A company may own the freehold, with flat owners holding shares, or it may be held in the names of up to four people. Your lease still sets your rights and duties for the flat.
In this article, we explain:
- How the 2 ownership structures work
- Who can buy the freehold
- What the purchase may cost
- Which records to check before buying a buy-to-let flat
What is a share of freehold?
If you buy a share-of-freehold flat, you still own it on a lease. The lease sets the term and rules for repairs, service charges and letting.
The freehold can be held in 1 of 2 ways:
- A company owns the building, and flat owners hold shares in the company.
- Up to 4 people own the freehold title directly, usually in a small building.
A company share is not the same as being named on the freehold title. The arrangement affects who makes decisions and what transfers when you buy.
Buying the freehold does not automatically lengthen your lease. The company or co-owners must agree to an extension and complete the legal documents.
Before completion, check whether your contract transfers company shares or a direct legal interest. Confirm that the seller is entitled to transfer it.
What changes when you own a share of freehold?
You and the other owners will usually make decisions about the building together.
This can include repairs, building insurance and who manages the property. However, the lease and any company rules will still apply.
If all owners agree, the freehold company may be able to grant a longer lease, often for 999 years, with a peppercorn ground rent. A solicitor will need to prepare the legal documents, and the lease extension will not happen automatically.
Ground rent might still apply if your lease requires it. However, new leases granted from 30 June 2022 usually include a peppercorn ground rent. So, always check your lease and any recent changes.
You still pay service charges for shared repairs, insurance and management. The freehold company usually collects these.
Before buying, it is sensible to review the previous service charge accounts and check whether any major works are planned.
How do you buy a share of freehold?
There are 2 main ways to buy a share of freehold:
- Through a private sale, which will require the freeholder's agreement.
- Collective enfranchisement, which is a legal process under the 1993 Act that lets qualifying leaseholders force the freeholder to sell. If price or terms are disputed, a tribunal can decide.
For collective enfranchisement, current rules generally require:
- A self-contained building with at least 2 flats.
- At least 2/3rds of the flats held on long leases, originally granted for more than 21 years.
- At least half the flats to take part. If the building has 2 flats, both must join.
- No more than 25% of the building’s floor area, excluding common parts, may be non-residential.
Some buildings may not qualify. For example, certain converted buildings with 4 flats or fewer may be excluded if the landlord has lived in one of the flats as their main home for the required period.
If this applies to your building, ask a solicitor to check whether the rule affects your claim.
In larger blocks, a company usually acts as the official buyer. Before serving notice, all owners should agree in writing on decision-making, cost sharing, and procedures if someone misses a payment.
For more information, consult the Leasehold Advisory Service's guidance on buying a share. Seek specialist legal and valuation advice before proceeding.
What does buying the freehold cost?
There is no fixed price for buying the freehold; costs are typically based on a statutory valuation.
The price may take into account:
- The landlord’s ground rent income
- The value of the landlord getting the building back when the leases end
- Marriage value, if any lease has 80 years or less remaining
Marriage value still applies under current rules. The Leasehold and Freehold Reform Act 2024 is expected to remove marriage value and change valuation rules, but these changes are not yet in force.
Your overall costs may include:
- The premium paid for the freehold
- Your solicitor’s fees
- Your valuer’s fees
- Company setup costs, if a company is used
- The freeholder’s reasonable legal and valuation costs in a statutory claim
To keep things clear, participating leaseholders should use a participation agreement. This document sets out how to share costs, what each person must pay, and what happens if someone leaves.
Before you begin, request an estimate from a specialist valuer. This way, you will have a clearer sense of the likely costs involved and can plan more confidently.
What happens to the lease, ground rent, and service charge?
Buying the freehold does not automatically extend your lease. Your current lease stays in place unless it is formally changed.
If all owners agree, the freehold company may grant:
- A longer lease (often 999 years)
- A peppercorn ground rent
- Updated lease terms if needed
A solicitor must prepare and complete the legal documents for any changes.
You may still have to pay ground rent if it remains in your lease. New leases from 30 June 2022 are usually set at a peppercorn ground rent under the Ground Rent Act 2022. Some leases are varied to reduce the rent to nil. Always check the registered lease and any deed of variation.
Service charges will also continue. The freehold company typically collects money for:
- Buildings insurance
- Repairs and maintenance
- Management costs
- Shared services
Check the lease and company documents to understand how payments are calculated, collected, and managed.
The table below shows what may change when flat owners hold the building’s freehold.
What should you check before buying a share of freehold?
Before exchange, ask your conveyancer to check exactly what transfers with the flat and what responsibilities you will take on.
Key points to confirm include:
- Check lease term, ground rent, repairs, and restrictions.
- Confirm if you get shares, membership, or direct freehold interest.
- For company-owned freeholds, review Companies House filings, share register, and transfer rules.
- Make sure the seller can transfer what they are selling.
- Review service charges, arrears, insurance, reserve funds, and major works.
- Understand how decisions and repairs are managed.
- Missing records or disputes can cause delays. Your conveyancer should check for issues.
Once the documents check out, the next question is whether the funding will arrive before completion. For general mortgage criteria and lease-length rules, GoGoProp’s freehold vs leasehold comparison covers the wider tenure topic.
Use bridging finance for a share-of-freehold purchase
Bridging finance may help if your buy-to-let purchase must complete before the mortgage funds are ready. It can fund the purchase first, then you repay the bridge through a planned exit, such as a buy-to-let mortgage, if that lender accepts the flat and title.
Before proceeding, ensure the lease and freehold share can be transferred. Your lender and solicitors will review all documents.
Check the completion deadline, total borrowing costs, and your repayment plan. If a lease extension or freehold transfer is needed first, confirm who will arrange it and the timing.
Keep in mind, bridging finance cannot fix title problems or guarantee that a mortgage lender will accept the flat later.
If you think bridging finance suits your purchase, review our full bridging loan terms before you apply.
GoGoProp lends under Money Lending Licence No. 1341/2025.
Key takeaways
- You own a lease of the flat and may own shares in the company that holds the building’s freehold.
- A valid collective claim can require the freeholder to sell; a private sale depends on agreement.
- Usually, at least half the flats must join, and at least two-thirds must qualify.
- A freehold purchase does not automatically extend your lease. Owners may agree to a 999-year lease at a peppercorn rent.
- Budget for the premium, professional fees, company costs and any reasonable freeholder costs under a statutory claim.
- Check the title, lease, share register, company filings and building accounts before exchange.
- Right to Manage can transfer some management duties without transferring the freehold.
Frequently asked questions
1. What happens if some leaseholders do not join the freehold purchase?
They usually remain leaseholders and do not receive a share through that purchase. The participating group must still meet the statutory minimum.
2. Can a freehold company grant a 999-year lease?
Yes, if the company has authority and the owners agree. A solicitor must prepare and register the lease documents.
3. What is marriage value when buying a freehold?
It is value created by combining the landlord’s and leaseholders’ interests. Under current rules, it may affect the price when a lease has 80 years or less.
4. Can leaseholders choose Right to Manage instead?
Possibly. Right to Manage can transfer some building-management duties without buying the freehold, if the building and leaseholders qualify.
5. What happens if the freehold company is struck off?
It can delay a sale or refinancing and may require restoration. Ask a conveyancing solicitor to check the company’s status and explain the remedy.
