Share of freehold: what it means, and how the residents' management company works

In England and Wales, share of freehold is normally a leasehold flat plus a stake in the company or trust that owns the building’s freehold. It is not the Scottish or Northern Irish model of flat ownership, so those jurisdictions need separate advice rather than a translated version of the same phrase.

What does share of freehold mean?

"share of freehold" has no statutory definition and isn't a legal estate — it's a marketing label for company membership, while every flat still sits on an ordinary lease. Government's own commonhold white paper says the landlord-leaseholder relationship survives it; owners aren't simply "the freeholder." In England and Wales, the freehold belongs to the building, not to each flat: LEASE puts it bluntly, “Technically, there is no freehold of your flat – just of the building your flat is in.” The usual share of freehold management company, freehold residents management company or residents property management company is the vehicle that owns that building freehold, while the individual owners remain leaseholders of their flats and members or shareholders of the company. Companies House says, “If you had a ‘share of freehold’ when you purchased your leasehold property, you will likely be a member.” Scotland and Northern Ireland do not use this England-and-Wales share-of-freehold structure.

What is the difference between a property management company and a residents management company?

A residents management company is normally the resident-controlled company connected to the building’s ownership or lease management, while a property management company can simply be a commercial managing agent hired to do the work. GOV.UK uses broad wording — “You can set up a limited company - sometimes called a Right to Manage or flat management company - so residents can jointly run a property, such as a block of flats” — but in practice the distinction matters because the RMC is the client and decision-maker, not just the contractor. LEASE says of a leaseholder company: “The company might manage the building itself or use a managing agent.” So yes, a freehold property can have a management company: the company may own the freehold, manage it, or instruct an agent. The Property Institute’s fee note treats RMCs as landlords’ clients, and says, “There’s no norm or standard management fee for managing a block of flats.” Scotland and Northern Ireland use different legal structures; RTM companies, for example, “do not exist in Scotland, or Northern Ireland.”

What does a director of a residents' management company have to do?

A director of a residents’ management company has to run the company for the company, comply with Companies Act duties, file company documents, and make sure the building-management obligations are actually dealt with even if a managing agent does the day-to-day work. The statutory duties are not a special RMC code: “The general duties specified in sections 171 to 177 are owed by a director of a company to the company,” and one core duty is that “A director of a company must exercise reasonable care, skill and diligence.” Company administration is not optional: “The directors of a company must deliver to the registrar for each financial year the accounts and reports required by—”, and “Every company must, before the end of the period of 14 days after the end of each review period, deliver to the registrar—”. Companies House warns that outsourcing does not remove responsibility: “You can hire a professional (for example, an accountant) to help manage your company, but you’re still legally responsible for your company’s records, accounts and performance.” In Scotland and Northern Ireland, do not assume an English RMC director role maps across unchanged.

What do a residents' management company's articles of association do?

A residents’ management company’s articles of association set the company’s internal rules: who can be a member, how directors are appointed, what directors can do, how votes work, and how the freehold company is run. The Companies Act rule is general, not RMC-specific: “A company must have articles of association prescribing regulations for the company,” and those articles bind the company and its members because “The provisions of a company's constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions.” Do not treat freehold residents management company articles of association as prescribed by the Right to Manage model: only RTM companies have that fixed statutory form, because the RTM regulations say, “The articles of association of a RTM company shall take the form, and include the provisions, set out in the Schedule to these Regulations.” An RMC’s articles are freely drafted subject to general company law. Scotland and Northern Ireland should not be read through the English RTM template.

Do you still pay a service charge with share of freehold?

Yes, you still usually pay a service charge with share of freehold, because owning the freehold company does not abolish the lease or the building’s shared costs. In England and Wales, the Landlord and Tenant Act 1985 still defines a service charge as “an amount payable by a tenant of a dwelling as part of or in addition to the rent—”, and share-of-freehold flat owners remain tenants under their long leases for this purpose. LEASE gives the practical answer: “As a leaseholder, you’re responsible for paying your share of the costs of managing the building through your service charge.” The charge should still be demanded and accounted for under the lease, and variable service charges are recoverable only where the costs are reasonably incurred; the statutory wording is “only to the extent that they are reasonably incurred”. A share of freehold service charge is therefore not a contradiction: it is how insurance, repairs, cleaning, managing-agent fees and reserves are normally funded. Scotland and Northern Ireland have different service-charge and common-cost rules.

What goes wrong with share of freehold?

Share of freehold goes wrong when owners forget that they are still leaseholders, still need company decisions, still need money collected, and may still fall within leasehold legislation. The government’s commonhold white paper says, “Yet many of the disadvantages of leasehold will remain, as owners will continue to occupy their flats under the terms of a lease and be bound by leasehold legislation, as well as failing to realise the full benefits of commonhold.” The common share of freehold nightmare is not the label itself but deadlock, unpaid contributions, short leases that were never extended, absent members, missing share transfers, poor accounts and unmanaged repairs. Non-participating leaseholders are another trap: “Even if they wish to purchase a share of the freehold from those who participated in the enfranchisement process at a later date, they have no automatic right to do so.” The Building Safety Act point is narrower than many summaries say: the leaseholder-protection carve-out applies where “the freehold estate is solely owned by tenants in the building, whether through a corporate structure or otherwise”, not merely because one owner personally holds a share. Scotland and Northern Ireland require separate analysis.

Can you get a mortgage on a share of freehold flat?

Yes, you can usually get a mortgage on a share of freehold flat if the lease, title, management structure and lender’s own handbook requirements are acceptable. The key is that the mortgage is still mainly underwritten as a leasehold flat, because share of freehold is not a separate legal estate: the Law of Property Act 1925 says, “A legal estate is not capable of subsisting or of being created in an undivided share in land or of being held by an infant.” UK Finance’s standard England-and-Wales lender position is generally workable for small converted blocks: “Unless we indicate to the contrary (see part 2), we have no objection to a security which comprises a building converted into not more than four flats where the borrower occupies one of those flats and the borrower or another flat owner also owns the freehold of the building and the other flats are subject to long leases.” Individual lenders differ; Halifax says, “We do not require a mortgage of the borrower's share of the freehold,” while Paragon requires arrangements for the leasehold and freehold interests to move together on sale. Scotland and Northern Ireland are not the same tenure system.

What happens when you sell a share of freehold flat?

When you sell a share of freehold flat in England and Wales, you sell the leasehold flat and also transfer the connected company share, membership or freehold interest so the buyer receives both parts. If the freehold is registered land, a legal transfer is not complete until registration, because “If a disposition of a registered estate or registered charge is required to be completed by registration, it does not operate at law until the relevant registration requirements are met.” If the freehold is held by a company, the Land Registry freehold title normally stays in the company’s name and the company interest is transferred separately; a company-share transfer is not SDLT on land, and HMRC says, “A transfer on sale of stock or marketable securities is subject to a 0.5% Stamp Duty charge, calculated by reference to the amount or value of the consideration paid.” Where the share consideration is £1,000 or under, HMRC says no 0.5% charge applies if the instrument has the required certificate. Scotland and Northern Ireland do not use the same share-of-freehold sale mechanics.

Last reviewed September 2026.

Sources

• Leasehold Advisory Service, buying the freehold of flats — “Technically, there is no freehold of your flat – just of the building your flat is in.” Source
• MHCLG, Commonhold White Paper — “A share of freehold removes a third-party landlord yet retains the fundamentals of a landlord and leaseholder relationship.” Source
• Companies House blog, becoming a director or member of a residents’ management company — “If you had a ‘share of freehold’ when you purchased your leasehold property, you will likely be a member.” Source
• GOV.UK, set up a property management company — “You can set up a limited company - sometimes called a Right to Manage or flat management company - so residents can jointly run a property, such as a block of flats.” Source
• Leasehold Advisory Service, how leasehold properties are managed — “The company might manage the building itself or use a managing agent.” Source
• The Property Institute, management fees advice note — “There’s no norm or standard management fee for managing a block of flats.” Source
• Companies House guidance, flat management and Right to Manage companies — “RTM companies do not exist in Scotland, or Northern Ireland.” Source
• Companies Act 2006 s.170 — “The general duties specified in sections 171 to 177 are owed by a director of a company to the company.” Source
• Companies Act 2006 s.174 — “A director of a company must exercise reasonable care, skill and diligence.” Source
• Companies Act 2006 s.441 — “The directors of a company must deliver to the registrar for each financial year the accounts and reports required by—” Source
• Companies Act 2006 s.853A — “Every company must, before the end of the period of 14 days after the end of each review period, deliver to the registrar—” Source
• GOV.UK, being a company director — “You can hire a professional (for example, an accountant) to help manage your company, but you’re still legally responsible for your company’s records, accounts and performance.” Source
• Companies Act 2006 s.18 — “A company must have articles of association prescribing regulations for the company.” Source
• Companies Act 2006 s.33 — “The provisions of a company's constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions.” Source
• RTM Companies (Model Articles) (England) Regulations 2009 reg.2 — “The articles of association of a RTM company shall take the form, and include the provisions, set out in the Schedule to these Regulations.” Source
• Landlord and Tenant Act 1985 s.18 — “In the following provisions of this Act “service charge” means an amount payable by a tenant of a dwelling as part of or in addition to the rent—” Source
• Leasehold Advisory Service, how leasehold properties are managed — “As a leaseholder, you’re responsible for paying your share of the costs of managing the building through your service charge.” Source
• Landlord and Tenant Act 1985 s.19 — “(a)only to the extent that they are reasonably incurred, and” Source
• MHCLG, Commonhold White Paper — “Yet many of the disadvantages of leasehold will remain, as owners will continue to occupy their flats under the terms of a lease and be bound by leasehold legislation, as well as failing to realise the full benefits of commonhold.” Source
• MHCLG, Commonhold White Paper — “Even if they wish to purchase a share of the freehold from those who participated in the enfranchisement process at a later date, they have no automatic right to do so.” Source
• Building Safety (Leaseholder Protections) (England) Regulations 2022 reg.2 — “(a)the freehold estate is solely owned by tenants in the building, whether through a corporate structure or otherwise; and” Source
• Law of Property Act 1925 s.1 — “A legal estate is not capable of subsisting or of being created in an undivided share in land or of being held by an infant.” Source
• UK Finance Mortgage Lenders’ Handbook, England and Wales — “Unless we indicate to the contrary (see part 2), we have no objection to a security which comprises a building converted into not more than four flats where the borrower occupies one of those flats and the borrower or another flat owner also owns the freehold of the building and the other flats are subject to long leases.” Source
• UK Finance Mortgage Lenders’ Handbook, England and Wales, question 5.7 — “We do not require a mortgage of the borrower's share of the freehold.” Source
• Land Registration Act 2002 s.27 — “If a disposition of a registered estate or registered charge is required to be completed by registration, it does not operate at law until the relevant registration requirements are met.” Source
• HMRC Stamp Taxes on Shares Manual STSM013010 — “A transfer on sale of stock or marketable securities is subject to a 0.5% Stamp Duty charge, calculated by reference to the amount or value of the consideration paid.” Source
• HMRC Stamp Taxes on Shares Manual STSM013010 — “Where the amount or value of the consideration for the sale is £1,000 or under, no 0.5% Stamp Duty charge will apply if the instrument contains a certificate of value (para 1(3A) of Sch.13 to FA1999).” Source