Commonhold on hold?

25 Sep 2019

Commonhold is an alternative to leasehold ownership and the idea behind it is that it allows a person to own a freehold flat, and be a member of the company which owns and manages the common parts and structure of the building. It was first introduced in 2002 but has never really taken off.

The Law Commission has recently looked at making commonhold a more attractive form of property ownership, but its proposals may not be enough to make it more appealing to the market, and in particular to developers who have no real incentive to structure developments as commonhold.

The Law Society has said that ‘it may be that a reduction in stamp duty land tax and the support of schemes such as Help to Buy may be needed to encourage the use of commonhold if widespread adoption is to be achieved’. The Law Commission also said that mortgage lenders are reluctant to lend to commonhold buyers because they are worried about the management association potentially becoming insolvent.

Therefore, it remains to be seen if commonhold ever becomes a viable alternative to leasehold. It may be the case that reforms to the current leasehold system may be prioritised first over a form of ownership that has never really gained traction since it was first introduced seventeen years ago.     

Andrew Flint

Partner

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