Expansion of commonhold the key to leasehold reform

Flat owners should be able to own their property outright without having to pay anything to a leaseholder, and the most effective way to do that is through an expansion to commonhold in England and Wales.

The Law Commission says reforming the leasehold system should start with more properties being converted to commonhold.

Tenure offers more security and benefits

Commonhold was introduced in 2002, allowing a homeowner to own their flat freehold while becoming a member of a limited company that owns and manages the building’s shared areas and structure.

So far, only a tiny number of flats are held as commonhold. Most apartment blocks, flats and shared developments such as townhouses, terraces and semi-detached homes, are held as leasehold, meaning the homeowner must pay an annual ground rent and fee to the freeholder – the person or company that owns the land on which the building stands.

As the Law Commission states in its latest update on the consultation to reform leasehold, commonhold offers far more security and benefits to homeowners than leasehold.

Own the property outright

Through commonhold, they will own their property outright. In leasehold, they only own the property for as long as the lease runs. When the lease is not renewed and runs out, ownership of the property reverts to the freeholder. Extending a lease can be a lengthy and expensive business.

In commonhold, there is no landlord or freeholder. Each flat owner has a stake in the building and is entitled to participate in decisions made about the shared areas.

Unlike in leasehold, there is no ground rent. Instead flat owners will pay a monthly or annual maintenance fee and insurance for the building and will have a say in how much is spent on that maintenance.

In leasehold, a landlord or freeholder can take the property back at no cost if the leaseholder breaches the terms of the lease.

Reform of legal barriers

Commonhold is regarded as a complicated way of taking outright ownership of a property. Now the Law Commission is proposing a series of reforms that would remove those barriers, making it easier to convert from leasehold to commonhold.

At Homeward Legal, we work with expert conveyancing solicitors who know the ins and outs of the leasehold system and can advise any property owner looking to extend their lease or who wants to find out more about converting a building to commonhold.

Culture change in home ownership

Professor Nick Hopkins, the Law Commission’s commissioner, said:

“Commonhold provides a once in a generation opportunity to rethink how we own property in England and Wales and offers homeowners an alternative system to leasehold.

“It involves a culture change, moving away from an ‘us and them’ mindset towards ‘us and ourselves’.

“We want to hear what people think of our proposals, so we can be sure the commonhold system will work for homeowners and the wider property sector.”

The Law Commission’s consultation is now open and will run until March 10 next year. You can make your views known here.


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