The burdens of leasehold ownership could be overcome, under radical property reforms proposed by the Law Commission.
Commonhold was introduced in 2002 but fewer than 20 commonhold developments have been built. It is also difficult to convert leasehold premises to commonhold as the consent of everyone with a significant interest in the property is required.
In a paper published this week, Reinvigorating Commonhold, however, the Law Commission suggests ways to make commonhold a more popular way to own property.
Under commonhold, a person can own a freehold flat and at the same time be a member of the company which owns and manages the shared areas and the structure of the building. Leaseholders, on the other hand, pay a service charge set by the landlord and must renew their lease after a certain number of years.
Commonhold’s benefits are that owners own their property outright whereas leases expire and can be costly to renew; there is no landlord and, instead, owners can make decisions about the shared areas together; there is no ground rent; there is no risk of forfeiture; and standard rules would apply, making conveyancing simpler.
The Law Commission proposes: allowing a commonhold development to include commercial as well as residential properties; making it easier to convert from leasehold to commonhold; increasing public confidence in commonhold; and replacing service charges set by a landlord with commonhold contributions approved by a majority of owners.
Professor Nick Hopkins, Law Commissioner, said: ‘Commonhold provides a once in a generation opportunity to rethink how we own property… and offers homeowners an alternative system to leasehold.
The deadline for responses to the consultation is 10 March 2019.
.tmb-mov69x69.png?sfvrsn=9a8f1ea9_1)
