Shared freehold- what does this entail

[twinklytoe]

Thinking about buying a buy to let in London due to needing to move away and wanting to have a place in uk as is only temporary.

Don’t want to be hampered by the leasehold charges but understand we’re not wealthy enough to just barge in and buy a freehold so thinking about shorthold. What’s the difference between sharing and not having the freehold?

If it's a flat, then it can be a share of freehold as the freehold is shared with other flats in the building.
You'll have all the responsibilities of a freeholder and some buildings have a management company and service charges to make sure the building is maintained. With some smaller buildings, the freeholders can choose not to have a service charge but then you need to fork out vast amounts if a big repair comes up.
It can also be very problematic if not all the freeholders are one the same page and it can lead to arguments and the building in disrepair.

Are you sure you can't get a freehold house if that's your preference? Maybe it'd just be a case of finding a good, more affordable area?

Thanks. It’s because it’s London and freeholds are rare. Didn’t want to go leasehold so investigating the shared option. Thanks for your reply, that makes sense when I see things like ‘monthly fund towards general repairs’ on top of the shared freehold then.
We need to yield as much rent as possible so that we can afford a place to live ourselves hence having London at top of our list. Also allow us to keep inline with the market in the coming years hopefully. Just worrying and never been a landlord before.

I'm in London too (live + have BTLs). Rental yields are generally much better in outer London. And you can get a freehold house in a nice area for under 400k.
If you prefer sty more central, then I'd probably go with a leasehold/share of freehold but in a sizeable block (e.g. 20 flats rather than 6 or something) and make sure there's a healthy sinking fund and a decent management company in place.

@JoJoSM2 thanks for your advice. Because we intend to buy and keep the flat in the long term we believe the capital on the property would grow at a bigger rate than outside of London in the long term so feel overall better off buying in central let’s not mention Brexit shall we
Your advice is helpful though

Outer London is zones 4-5-6 not out of London. If you’re buying in zones 1-2, be careful as prices are plummeting.

We had a share of the freehold (plus obviously the leasehold) on a flat in a Victorian conversion. There was only us and one other flat. We had a survey to check no major works were needed. The only cost was the annual buildings insurance (through a broker, you can't just get a regular policy) which covered the whole building and named us and the other freeholder.
Obviously the downside was that, if we'd have stayed long-term, we might have found ourselves liable for half the cost of a big bill like a new roof. However, with an ok survey and saving about £2k a year in service fees, I couldn't have moaned too much if we'd have had to shell out £5-10k after 10 years.
We did some things ourselves to improve the communal areas of the property (repaired and painted a fence, borrowed some scaffolding and patched up render and painted woodwork above the upstairs bay window, decorated the small communal entrance) but this made our flat more desirable when we sold so I didn't begrudge it. It wasn't really worth getting a professional and splitting the costs, as 50% of it would have been more than it cost to do ourselves.

My DD lives just in zone 2 and sold prices are very healthy. Just depends what area. Absolutely no sign of plummeting prices.

However I would not necessarily be wary of leasehold. They can be expensive when management charges are high, but where charges are reasonable they are a standard purchase. We have a freehold flat and you need to be certain there are no big bills on the horizon that you will be responsible for and so will the other owners who might not pay up!

BubblesBuddy, don't know where your daughter lives and how the neighbourhood is getting on on a micro level. But prime London property prices last year went down by over 20% in Kensington and Chelsea and Westminster, with other central, prime areas not far behind. City of London went up significantly, though. Outer London prices have been a lot more stable.

Actually yes property prices have gone down and we live down the road from London so the prices in my area have also gone down. That’s the only way we could even consider the purchase tbh.

When I was looking at a share of the freehold I was told to look at the leasehold and freehold as separate things.

If you buy a flat you lease it from the freeholders. The freeholders own the land which the property is built on. If you own a share of the freehold you and 1 (or 2/3/4 whatever) other people jointly own the land.

As a leaseholder once the term of the lease is up then the property reverts back to the freeholder (which you would be one of so that's better than it going to a single freeholder).

To be honest the above is probably bollocks and I never did understand it. We did buy the property and a few years later another of the flats got sold so the person we shared the freehold with changed. He was an absolute nightmare and when we tried to sell he refused to sign off on the sale and held us up for months, losing us our purchase and a buyer in the process. Even our solicitors were stumped because they hadn't come across someone so uncooperative. We eventually did sell (after threatening to take him to court) and vowed never to buy a leasehold/share of freehold again.

If you do buy a share of the freehold, make sure it's run properly with a management company and not as a "gentleman's agreement" between the freeholders.

None of those areas JoJo - and they were inevitably overpriced in the first place. Not quite as posh as that but that maybe indicates why some areas have prices which have held up. A bit less posh! Good transport links and still better value for money.

I own a share of the freehold of the flat I own (zone 2). There are 3 other flats and all are BTL and frankly, a fucking nightmare. They've made their money having bought the flats when they were £100k and now won't spend a penny doing anything.

Owning a share of the freehold only gives you more control but you've still got to deal with the other freeholders and you'll have no idea what they're like until you've bought.

Whether it’s leasehold or share of freehold you’ll still have to pay for service charge or repairs as needed. Leasehold is fine but make sure it’s long - I’d not buy one less than 100 years, preferably 125. If one of those 999 leases that is a virtual freehold.
By the way u have a flat in Fulham bought 2016 it has dropped about 5% in value (just had it valued). If you take stamp duty into account more like 10 %.