The risks of owning a Freehold Flat - Williamsons Solicitors Skip to main content

Posted: 30/05/2024

The risks of owning a Freehold Flat

Reading Time: 4 minutes

You should not make the decision to purchase a freehold flat lightly. These are unusual properties fraught with difficulties, but with our legal expertise we can guide you through the process.

What is a Freehold Flat?

Most people are firmly of the belief that freehold is best. Whilst this may be true for the purchase of a house it is not the case if you are buying a freehold flat.

When you purchase a freehold property, you own the property and the land upon which it sits. You are largely free to do whatever you wish.

In the case of a freehold flat you will not necessarily own the land merely the flat. A freehold flat is freehold land that is split horizontally. You would own the flat and the external walls. The freehold titles are stacked on top of one other. If you purchased the middle flat, you would not have any liability to pay for the roof and / or foundations of the building. You would own a flying freehold because the flat is over someone else’s freehold flat. If you own the ground floor flat, you will own and be responsible for the upkeep of the foundations, similarly, if you own the top floor flat you will own and be responsible for the upkeep of the roof.

Disadvantages of Owning a Freehold Flat

There are several reasons why freehold flats are unpopular with solicitors and lenders, some are listed below:

  • Insurance – Lenders are concerned about the insurance of the property. Lenders will want the whole of the building to be insured under one policy. The danger is that each freehold flat owner obtains their own insurance, some may not obtain insurance at all, others perhaps inadequate insurance. This raises the possibility that there will not be enough insurance monies available to fund a rebuild should the property be destroyed.
  • Inability to enforce ‘positive covenants’ contained within the deeds upon future property owners – Positive covenants are, for example, obligations to do something such as contribute towards the costs of maintenance and repair and carry out essential repairs to the property structure in a timely manner. The only people who can be compelled to contribute towards the costs of these works are the original flat owners, NOT subsequent owners. Only the person who split the property into flats can act. This person is unlikely to have any interest in doing this once they have sold the property, or they have died or cannot be traced. There is no automatic system in place to enforce these obligations on future owners, which is why lenders are very reluctant to lend money on freehold flats.
  • Lack of clear responsibilities / obligations between freehold flat owners – Often there is no clear agreement in place identifying who is to decide what work needs to be done, when, and by whom. Failure to reach an amicable agreement with your neighbours could affect the appearance and condition of the building as well as the saleability of the property.
  • Re-sale difficult – Because of the problems mentioned above, you may find it more difficult to sell than a leasehold flat.
  • Limited to cash buyers – Banks and building societies do not like freehold flats and are generally unwilling to lend money to purchase them. They are seen as being a risky purchase. Due to lenders reluctance to lend money to purchase freehold flats, re-sale will often be limited to cash buyers only.
  • Property devalued – Because it is more difficult to sell, you may find that the price you receive is less than it would have been had the flat been leasehold.
  • Once a block of freehold flats has been set up, it is not often possible to convert them into leasehold.

Advantages of Owning a Freehold Flat

  • You own your own freehold flat. This gives you the opportunity to make changes to your property without the need for permission from a third party (landlord / management company).
  • Unlike a leasehold property, you do not need to pay ground rent or service charges. This can help save you money when it comes to monthly expenses and bills.

Our Legal Recommendations when Buying a Freehold Flat

The biggest risk when it comes to freehold flats is the unknown future costs of maintenance and repair that may need doing to the building and the enforceability of those obligations on the other freehold flat owners.

We can try to resolve some of the issues by encouraging all flat owners to enter into a ‘Deed of Covenant’ and placing a restriction on their deeds. We cannot of course enforce this upon other owners, merely encourage them of the benefits to do so.

A ‘Deed of Covenant’ is a legal agreement, signed by all the freehold flat owners. The Deed is put in place to show that agreement has been reached as regards maintenance, repair and insurance. The Deed would need to confirm that the building is insured as a whole, and that each flat owner pays their respective share.

The deed ensures that you can take direct action against the other flat owners if they are in breach of their obligations. It also means that they can take similar action against you! Some lenders will lend money on freehold flats if there is such a deed, but they are not a perfect solution. There is, for instance, usually no provision dealing with the matter of who decides whether the work needs to be done at all, by whom, or when.

The restriction will ensure that each time that the property is sold, the incoming owner signs a similar ‘Deed of Covenant’.

How can we help?

We will explain the legal process and documentation, ensuring that you fully understand freehold flats. By working with us, you can have peace of mind that your legal requirements are met, and your rights are protected.


We’re ready to chat when you are

Drop us an email or give us a call for a no obligation chat to see if we can help.