Is It Hard to Sell a Freehold Flat?

The UK is home to a variety of property types, with flats being the most common. Flats can be categorised as either ‘leasehold’ or ‘freehold.’ But what does this mean? And is it hard to sell a freehold flat? In this article we’ll explore what a freehold flat is and how to sell one, discussing the challenges and guiding you through the process. 

What is a freehold flat?

A freehold flat is a property where the owner owns both the flat and the land it sits on. A flat is a portion of freehold land that is divided horizontally, meaning you own the flat and the external walls. The freehold titles are layered on top of each other. The owner of a freehold flat is responsible for maintaining both the apartment and the land. 

A share of freehold occurs when multiple individuals within an apartment building collectively own a share of the land it sits on. This arrangement gives the residents significant control, allowing them to manage and maintain the property, as well as make alterations or extensions. Additionally, it simplifies the process of extending leasehold terms.

How common are freehold flats?

Freehold flats are uncommon, especially because most mortgage lenders do not approve applications to purchase one. This is due to the flat being part of a larger building, which creates confusion about who is responsible for what. For example, is the person in the middle flat of the building responsible for the maintenance of the roof or the garden? In general, it is much more typical to own the freehold of a detached property, as nearly all detached houses are freehold. It is always clear who owns the property and land and is therefore responsible for maintenance and upkeep.

A share of freehold property is quite different from a freehold flat. While share of freehold properties are more common in the UK than freehold flats, they are still not widespread. The advantage is that you can get a mortgage for a share of freehold, so you may come across this type of property on the open market.

Is it hard to sell a freehold flat?

Yes, selling a freehold flat can be challenging because most banks do not provide mortgages for these types of properties. As a result, you would need to find a cash buyer who can purchase the property without relying on a mortgage. When selling a freehold flat, you will usually receive a lower price compared to a typical ‘leasehold’ flat. This is due to the legal complexities involved, which the new owner would inherit. For this reason, many potential buyers shy away from purchasing freehold flats.

What are the advantages of owning a freehold flat?

Owning a freehold flat comes with a few advantages, although they are limited. The main advantage is that you own your freehold flat, which gives you the ability to make changes without the permission of a landlord. Additionally, you won’t have to negotiate lease extensions with a freeholder, as you are the freeholder. You also typically won’t have to pay a service charge or ground rent, unlike a leasehold property. This can result in significant savings and is a big help when it comes to bills and monthly expenses. 

What are the disadvantages of owning a freehold flat?

Owning the freehold of a flat comes with legal, administrative, and sometimes financial responsibilities. Freehold flats are rare, and here are just a few of the reasons why:

• Insurance problems: Mortgage lenders tend to be concerned about the insurance of freehold flats. Lenders would rather the whole of the building to be insured under one policy. The risk is that each freehold flat owner will get their own insurance, some may not obtain insurance at all, others perhaps inadequate insurance, which can cause issues down the line if something were to happen to the building.

• Lack of clear responsibilities: Often there is no clear agreement in place with regards to maintenance, identifying what work needs to be done, when, and by whom. Failure to reach an amicable agreement with your neighbours could affect the appearance and condition of the building as well as the saleability of the property.
• Difficulty reselling: Because of the problems mentioned above, freehold flats are more difficult to sell than leasehold flats.
• Devalued property: Because they are more difficult to sell, you may find that the price you receive is less than it would have been had the flat been leasehold.

Why do lenders not give a mortgage on freehold flats?

Banks often have different reasons for not offering mortgages on freehold flats, but here are the most common explanations:

• The owner of a freehold flat has no legal obligation to maintain the building, meaning the bank cannot be confident that their mortgage is secure, as the property could fall into disrepair. 
• Disputes often arise between freehold flat owners, particularly because it’s challenging to determine which parts of the building belong to whom. If the flat is sold, future freeholders may not agree to the existing arrangements. 
• Finally, as freehold flats are rare and come with drawbacks they are difficult to resell.

Can I still get a mortgage on a freehold flat?

Whilst it is possible to get a mortgage for a freehold flat, only a limited number of lenders will consider this type of property. It’s important to contact banks directly to determine if they are willing to offer a mortgage for a freehold flat. In many cases, smaller or lesser-known lenders may be the only ones that provide financing for freehold flats. 

How to sell a freehold flat:

At auction

One way to sell your freehold flat is at an auction house. Auctions are a great option for selling atypical properties, although you might not get the highest price for your property. It’s important to consult with the auction house beforehand to ensure that listing your freehold flat is a viable selling option.

To a cash buying company

Genuine cash buying companies are dedicated to purchasing all types of properties. If the process goes smoothly, we can buy your freehold flat within a couple of weeks and transfer the funds to your account right away. However, keep in mind that the offer you receive will be slightly below market value due to the challenges involved in selling this type of property.

Sell your flat fast

Selling a flat can be more challenging than selling a house. Flats tend to attract first-time buyers and buy-to-let investors – but interest alone doesn’t guarantee a sale. At SellHouseFast.uk, we offer an alternative to the uncertainty and waiting around: a quick and straightforward sale, with no fees.

Selling your flat to a cash house buyer like SellHouseFast.uk means you avoid the hassle of viewings and price negotiations typical in the open market. We can sell your flat fast, buying it directly with our own cash, guaranteeing a sale and avoiding common pitfalls like chain breaks or last-minute buyer withdrawals. Start the process today with a free cash offer.