The Government yesterday published a welcome white paper on commonhold. It goes further than the leasehold reform measures proposed by the last Government, which didn’t mention commonhold, although most reform campaigners want to see leasehold ultimately replaced with it.
The paper proposes a comprehensive new legal framework to make commonhold the default tenure for new build flats, bringing England & wales into line with most other countries in the world. Housing Minister Matt Pennycook intends to follow this with a consultation later in the year on the best approach to banning new leasehold flats.
Commonhold was introduced in a 2004 Act but never took off. This is partly because most developers prefer the revenue opportunities of leasehold, but also because of flaws in its design. In 2020 the Law Commission completed a thorough review and updating of commonhold law and this will be the basis for it going forward.
In brief, commonhold is genuine ownership, unlike leasehold which is, in legal terms, an unequal landlord-tenant relationship, where the landlord/freeholder has far greater legal protection than the leaseholder.
With commonhold there is no lease, no time limit, the flat is owned in perpetuity, and no ground rent. In a small building of 2-4 flats, the commonholders may decide to manage the property themselves. In a larger building they would be more likely to employ a managing agent. However the crucial difference with commonhold is that the agent is accountable to the residents rather than an absent freeholder. If the residents are not satisfied with the agent, they have the option to replace them. There will be service charges but these are controlled by the residents, or their agent.