The definition of a freeholder is the person who owns the land outright. The freeholder will have their title registered with the land registry. Freeholders can then rent their property on a short lease or on a long lease to a leaseholder. Many leaseholders use mortgages to pay for their lease.
Even though a leaseholder under a long lease will have a lot of control over the property, there are some obligations that remain with the freeholder. A sensible starting point is to look through the Landlord and Tenant act 1985 and the Landlord and Tenant Act 1987. These will point out the duties of the freeholder under statute. Then you must look at the leasehold contract to see if any of these duties have been amended or new obligations added. This blog will look at 5 common areas that are the responsibility of the freeholder.
1. Repairs and Maintenance to Building Structure
Generally, the freeholders are responsible for maintaining and arranging repairs for the structure of the building. This includes the roof, communal areas inside the building e.g. stairs. The leaseholder is responsible for maintenance of the inside of the property e.g. plumbing, decoration and flooring.
You are only responsible for arranging the repairs, any costs for the repairs can be recovered from the leaseholders. The procedure for doing so depends on the cost of the repairs.
2. Cleaning and Maintenance of Communal Areas
If your property is a block of flats there is likely to be communal areas shared by all of the leaseholder. This can include communal hallways, stairs, lifts, doors. The obligations for maintenance of these areas falls to the freeholder.
The costs for this maintenance generally come out of the service charges.
3. Ground Rent and Service Charges
The calculation of ground rent charges has recently been coming under intense scrutiny due to an increasing number of freeholders charging extortionate grounds rents. The government has stated that leaseholders should not have to pay rents that are solely for the commercial benefit for the freeholder.
4. Building Insurance
As a leaseholder does not own the building and is not responsible for the structural upkeep, they will likely only have content insurance. The lease could specify that the freeholder need to acquire buildings insurance. If the lease does not specify it is a good idea that the freeholder obtains the insurance or it may result in costly disputes.
5. Management Reports
The freeholder has the responsibility for setting, collecting and spending the ground rent and service charges. The amount charged must be reasonable or there could be expensive disputes taken to the tribunal. Calculations should be set out in the lease.
The freeholder is also responsible for delivering a management report to the leaseholder to demonstrate how the money has been spent.