Share of freehold responsibilities: what you actually have to do

Share of freehold means the leaseholders in a building collectively own the freehold, usually through a company that holds the title on everyone's behalf. You still own your flat on a lease, but you are also, jointly with your neighbours, the landlord. That dual role is the source of both the benefits and the duties.

How the ownership is usually structured

There are two common setups, and it matters which one you have.

• A freehold company. A limited company owns the freehold, and each flat owner is a shareholder or member. This is the most common and the most robust structure, because the company outlives any individual owner. Decisions, accounts and filings run through the company.
• Names on the title. The freehold is held directly by up to four named individuals as trustees for everyone. This works for very small buildings but gets awkward when people sell, because the title has to be transferred each time.

If you have a company, you have taken on company responsibilities as well as building ones. That is not a bad thing, but it is the part people underestimate.

Your responsibilities, grouped into four areas

1. The money

• Set a realistic annual service charge budget covering insurance, maintenance, cleaning, and a contribution to the reserve fund
• Collect service charges from every flat, including from yourselves, and chase any arrears
• Keep service charge money in a separate account, held on trust for the leaseholders
• Build and protect a reserve fund for big future costs like the roof, drains or redecoration

2. The building

• Maintain the structure, roof, communal areas and shared services as the lease requires
• Arrange and renew buildings insurance for the whole structure each year
• Organise repairs, get comparable quotes, and keep records of what was done
• Plan ahead for major works rather than reacting to emergencies

3. Safety and compliance

• Arrange a fire risk assessment for the common parts and act on its findings
• Keep electrical and, where relevant, asbestos and gas safety checks up to date
• Hold the certificates and records that prove the building is safe and well run

4. The company

• File a confirmation statement with Companies House at least once a year
• File annual accounts on time, even if the company is dormant or very small
• Keep the register of directors, members and the registered office up to date
• Hold decisions properly and keep minutes, in line with the articles of association

Do you have to use a managing agent? No.

Because you collectively control the freehold company, you decide how the building is run. You can hire a managing agent, but you are under no obligation to. Many share-of-freehold buildings of 3 to 12 flats run perfectly well without one, keeping the agent's fee and commissions in the building instead.

The trade is straightforward: you do the organising, or you pay someone to. Self-management works best when the load is shared and supported by a proper system, rather than dumped on whichever neighbour is most conscientious.

Being a director: what it really involves

Someone has to be a director of the freehold company. Directors carry legal duties under the Companies Act 2006, including to act in the company's interests and to keep proper records. That sounds heavy, but for a small residential company the practical reality is modest: make sensible decisions, keep clean records, and file on time.

The genuine risk is not personal liability for honest mistakes, it is letting things drift: missed filings, no insurance, no fire risk assessment, no records when a flat is sold. A simple compliance calendar removes almost all of that risk by making sure nothing is forgotten.

What happens when someone sells?

When a flat sells, the share of freehold transfers with it. With a freehold company, the seller's share or membership passes to the buyer and the company records are updated, which is far simpler than re-transferring a title. The buyer's solicitor will ask for the usual pack: accounts, insurance, service charge information and the company documents. A building that keeps good records answers those enquiries quickly, which helps sales go through smoothly and avoids the per-item charges an agent would add.