You can purchase the freehold of your building in the joint names of the individual leaseholders. Up to four individuals can hold an interest in land and so this option will only be available if there are four flats or less in your building.
The advantages of holding the freehold as individuals in joint names are:-
- You will not incur the cost of setting up a company to hold the freehold interest
- You will not be required to comply with the regulatory requirements which govern companies, for example preparing annual accounts and filing company returns
- No-one has to take on the responisbility of becoming a Company Director of the Company Secretary
If you decide to hold the property in joint names we would advise you to enter into a Declaration of Trust which will govern the relationship between you as joint freeholders. The Declaration of Trust will provide that you hold the freehold as Tenants-in-Common so that in the event of your death your interest in the freehold would not automatically pass to the other freeholders but would form part of your estate (see separate note on Joint Ownership)
The Declaration of Trust will also provide that the share of freehold relating to each flat is transferred when each flat is sold so that the freehold remains in the ownership of the flat owners from time to time.
The disadvantages of holding the property in the joint names of individuals are:
- Sale of flats in the building – A flat in the building is sold the corresponding share of the freehold will be transferred to the new buyer. All joint freeholders will be required to sign the Transfer document transferring the share to the new buyer. This can be cumbersome particularly where flats are owned as investment properties and not all joint freeholders live in the building.
- Who does what? – As joint freeholders you will be responsible for the insurance and repair and maintenance of the structure of the building and common parts. You will need to nominate one of the flat owners to be responsible for ensuring these duties are carried out.
Buying your Freehold