Freeholders’ Rights Over Leasehold Property

The powers and rights of freeholders and leaseholders living in leasehold flats are currently not equally balanced. While freeholders have a right to carry out major repairs to the building, or to make changes to communal areas such as staircases or gardens, or to increase the amount of ground rent leaseholders have to pay, leaseholders have some protection. They can also potentially win greater control over the arrangements.

Understanding freeholders’ rights over a leasehold property is something that is key to the leaseholder. Our in-depth guide explains the rights of the freeholder.

Who are the Freeholders of Leasehold Flats?

Freeholders of leasehold flats are typically individuals, companies, or organisations that own the land and building where the flats are located. As freeholder, they are the owner of the property, including all parts that owners of leasehold flats do not own, including external parts of the building, communal areas and the land.

Freeholders are responsible for the overall structure, maintenance and repairs, and sell individual flats on long-term leases to Leaseholders for terms between 99 years and 999 years.

Most freeholds are managed by freeholder’s managing agents who collect the maintenance payments from the freeholders (also known as ground rent) and handle the organised maintenance, the freeholders’ building insurance and collect the service charges from the resident leaseholders. Sometimes, freeholders are property developers, investment companies, or even residents themselves if the freehold has been collectively purchased.

Key Rights Freeholders Have Over Leasehold Property

1: Development over the roof or other common parts

Under UK law, freeholders have permitted development rights, allowing them to build certain extensions or add to their roof space, provided specific conditions are met. These laws enable development of a house, in the form of extensions and loft conversions, and allow dwellings to increase the floorspace of qualifying residential properties.

Sometimes Permitted Developments occur on Leasehold properties but, unlike Freehold properties, no approval of the Leaseholder is required. However, it’s important for leaseholders to understand the legal rights they do have in permitted developments, which include:

• To be consulted and kept informed regarding any future development plans.
• The right to object to the proposed works.
• A right to know about proposed development.
• Right to reasonable disturbance compensation for the effect that the works have on occupation.

2: Restricting access to areas of the building

The freeholder will have rights over the property and be able to grant permissions or restrictions (e.g. Doing so can cause complex freeholder/leaseholder disputes.

The lease will set out your rights of access over any areas of the premises where access is to be shared with others, including other tenants and any joint owners, as the case may be, and any right of way granted or required in relation to the leasehold premises. If you are unsure of your rights of access please refer to the terms of your lease for clarification.

3: Deciding on managing agent/building management/insurance

As freeholder you have the right to choose a managing agent to manage the building on your behalf. They will look after the day to day running of the building and make decisions when repairs are needed along with associated costs. In general Leaseholders will be required to pay a service charge towards the freeholder’s costs and the buildings insurance premium.

The freeholder would make the final decision, but leaseholders should be fully aware of the cost to the service charge of their decisions and have the right to challenge what they consider to be over the top charges or mismanagement of the service charge, including taking legal action if they believe it to be appropriate.

4: Ground rent demand

Freeholders have the right to charge leaseholders ground rent and service charges. The ground rent is for the land the house sits on and is fixed within the terms of the lease and must be paid on time and in accordance with the terms set out within the document.

While laws to support Peppercorn Ground Rent (a nominal fee) are in place, they do not apply to all leases, so it’s important to check your lease terms for onerous ground rent clauses. As such, there can still be onerous terms placed within the contract regarding ground rent escalation.

New legislation is being introduced to restrict the ability to charge excessive ground rents on homes. Leaseholders should check their lease for ground rent amounts and the terms under which it can increase, and also be aware of their options should they feel ground rent is increasing unfairly. From 30th June 2022 it will also be possible to make an application to reduce ground rent.

Responsibilities of a Freeholder of Leasehold Property

A freeholder of a leasehold property carries several key responsibilities, primarily concerning the maintenance, management, and overall upkeep of the property. These responsibilities generally concern the maintenance, management and repair of the property.

• Building Maintenance and Repairs: Freeholders are responsible for maintaining the structure of the building, including the roof, exterior walls, and communal areas such as hallways, stairs, and gardens. They will also be responsible for the maintenance and repair of the communal areas within the development such as the entry hall, stairs etc and the grounds.
• Arranging Insurance: The freeholder must secure and maintain adequate building insurance, ensuring coverage for structural damage due to accidents or natural events, such as fire or storms.
• Management and Reporting: Freeholders need to provide detailed reports to leaseholders about the money collected through service charges and ground rent, showing how these funds have been spent on the property’s maintenance.
• Compliance with Legal Requirements: Freeholders must ensure that the property complies with relevant health and safety regulations, including gas and electrical safety where applicable.

Your Rights as a Leaseholder

While the freeholder holds a number of rights over the property, you have many protected rights as a leaseholder designed to ensure fair treatment and provide a pathway to greater property control in leasehold properties. However, there are many rights that you as a leaseholder have protected.

1. Right to Access Information: Leaseholders can request detailed information about service charges, insurance, and building management from the freeholder​.
2. Right to Challenge Charges: You have the right to challenge unreasonable service charges or ground rent increases through a tribunal if necessary​.
3. Right to Collective Enfranchisement: Leaseholders may collectively purchase the freehold, granting property ownership, control over management decisions, costs, and lease terms​.
4. Right to Extend the Lease: Leaseholders have the right to extend their lease by 90 or 50 years (for flats and houses respectively) to avoid losing property value due to a short lease term​.
5. Right to Manage (RTM): Eligible leaseholders can collectively take over building management without buying the freehold, allowing them to appoint their own managing agents​.
6. Right to Be Consulted: For major repairs or improvements, leaseholders must be consulted and can challenge costs if they find them unreasonable​.

For a complete overview of your legal rights, you can consult government resources like GOV.UK.

These rights are part of broader Leasehold Reforms aimed at increasing leaseholder rights and transparency over property management, ultimately providing a pathway to greater security and reduced costs over time.

What To Do If You’re Unhappy With Your Freeholder’s Rights

If you feel that the freeholder is behaving badly, or you just feel that their rights and powers are too extensive, what can you do?

Purchase the Freehold

Collective Enfranchisement Rights. As long as the relevant criteria are met, leaseholders have the right to purchase the freehold of a building collectively. This can be a very powerful means to achieve the ownership of the freehold and the associated control and ownership of the building and its management, plus the long term security of the property and the rights over the property.

Negotiate with the Freeholder

Some Leases resolve themselves through open discussion or mediation whilst others require a neutral third party to resolve disputes often over the service charge, matters related to building management or property repairs. It is wise to take legal advice before entering into any negotiations.

Take Further Action

If these negotiations are not successful then there may be an opportunity to take the matter to a tribunal where legal disputes over matters such as service charges or ground rent can be determined. The tribunal can help address legal disputes over service charges or ground rent, appoint new property managers, or enforce lease compliance if severe mismanagement occurs.

Closing Thoughts

For Leaseholders who feel their rights are not being upheld by the Freeholder, collective freehold ownership of the building can be a powerful solution.

The main advantage of owning the freehold is that views can be taken into consideration by the freeholder and ultimately Views can be taken by the owner if desired, hopefully preventing any future disagreement. If you wish to acquire the freehold for your residential property then the Freehold Collective can provide advice and assistance to help the process be as smooth and expeditious as possible.

Contact us today or use our freehold calculator for an instant estimation of the value of your share of freehold.

Freeholder Rights Over Leasehold Property FAQs

What is a freeholder responsible for on a leasehold property?

The freeholder is generally responsible in Leaside for the maintenance and repair of the structure and exterior of a house (including the roof, walls and common areas), for insuring the property and for collecting ground rent and paying services charges on behalf of the house owners.

Does the freeholder own the leasehold?

A question we are often asked is: what is a freeholder? A freeholder is an individual or company who owns the freehold of a property (building and land), whilst a leaseholder owns the lease of a flat for a fixed term.

What rights do you have with a leasehold property?

Leaseholders have the right to the quiet enjoyment of their homes, to challenge unfair and excessive charges for services provided and to purchase the freehold of the property either on a house by house basis (lease extension) or in bulk for the whole building (rent to buy).

What freeholder rights does my council or housing association have?

If your council or housing association is the freeholder of your leasehold flat, they hold rights to manage and maintain communal areas, collect service charges, and enforce lease terms in accordance with leasehold law. For managed properties this will usually be a local council or housing association.ements for major works, providing leaseholders with notice on significant projects.