What are the Responsibilities of a freeholder?
Freeholders are those who own their homes or buildings, plus the land the building is situated on and airspace above it.
As such, because they own the building and its surrounding land, owning a share of the freehold comes with a multitude of responsibilities. Freeholders in England and Wales especially will need to take care of property maintenance and upkeep, ensuring the building is correctly insured, and also council tax obligations depending on the region in which they live.
Below we’ve compiled a list of responsibilities freeholders can expect as a freeholder.
Typical freeholder responsibilities
Building maintenance and upkeep
Building maintenance and upkeep is a major responsibility for freeholders. Freeholders need to:
- Undertake any maintenance and repairs to the building structure, including its roof and guttering. If the freeholders own a share of the freehold in a block of flats or apartments, freeholders must also ensure the upkeep of maintenance and repairs in communal areas
- Arrange and schedule any internal and external general upkeep, such as cleaning, decorating, and painting
- Manage the supply of utilities such as heating, plumbing and electricity
- Arrange for the maintenance of communal gardens, and oversee any pest control work
- Arrange and prepare for major works ensuring that they follow Section 20 of the accommodation act
- Communicate with contractors to schedule works and arrange payments
- Communicate with leaseholders for the collection of ground rent and service charges
- Ensure that the building complies with health and safety regulations
Some of the most important obligations for a freeholder are arranging and renewing buildings and other required insurances. Leaseholders, on the other hand will be responsible for paying these policies in accordance with their lease agreement. As this can get expensive over time, leaseholders should consider purchasing their own contents insurance policy as anything inside their flats won’t be covered by buildings insurance.
The lease may state that as the freeholder, you must obtain comprehensive buildings cover. This is in everyone’s best interests, of course. If a mishap occurs and renders small damages to the property or premises, this can be rectified with ease by your insurance company if they are covered under an adequate policy like Comprehensive Buildings Cover which covers any damage done to properties from accidental events such as fire and storm-related incidents.
It is important to note that the policy taken out should refer to landlord’s building insurance and not just residential, as residential buildings insurance will not cover a residential building that is freehold.
Service charges and management reports
Service charges are payments made by leaseholders contributing to the buildings management services, maintenance charges and repair works.
Freeholders are responsible for collecting service charges but also setting and spending them, though the amount should be fair and reasonable, else freeholders could find themselves challenged in tribunals. The terms of the lease dictate what services can be charged by the freeholder and the payment terms.
Setting service charge amounts is a big responsibility for freeholders as the amounts should be affordable and fair, with the lease agreement breaking down what the leaseholders payment will be covering. Because of this, it’s important to not only supply the right services but also supply them at a fair cost.
Read everything you need to know in our full guide to buying the freehold of your flat.
Communicating with a property management firm
When freeholders take over their share of the freehold, the responsibilities involved with the management and repair of the block of flats can be a daunting and time consuming task.
To help freeholders, property management companies can run the block of flats on their behalf. Property managers act as middlemen, and can collect service charges, schedule contractors, oversee building work, liaise if necessary with leaseholders and even manage budgeting and accounts.
However, just like with employing any third party – property management companies can pose risks. For example a poor company may harm leaseholder happiness if their work is not up to standard, or they don’t provide good customer service.
Should circumstances deteriorate to such a level, freeholders could find themselves being ousted from ownership by a Residents Management Company formed by leaseholders as part of a Right to Manage, or they may choose to Collectively Enfranchise and legally force the sale of the freehold of the building.
In these events, freeholders would lose their claim to the property and any income it provides. Thus, it’s vital to ensure that should the services of a property management company be required, that the management company is well researched and the correct fit for the building and its leaseholders.
To meet the building maintenance and upkeep responsibilities it’s vital that all freeholders have a good understanding of Landlord and Tenant laws, as well as health and safety legislations amongst other leasehold or property ownership matters.
Lack of knowledge could lead to the building deteriorating, as well as unhappy or vulnerable residents living in both unpleasant or dangerous environments. Failure to comply with legislation could also lead to criminal prosecution, amongst fines or terms of imprisonment which is why it’s advisable to seek advice before purchasing a share of the freehold.
At the Freehold Collective, we can help! We’re happy to consult with leaseholders at any stage of their freehold journey, and we have a wealth of information and experience having all overseen our own freehold purchases. Contact us today for a quick chat.