Call for evidence: can we reach a verdict on Commonhold at last?

In December 2017 the Government published its response to the Consultation on “Tackling Unfair Practices in the Leasehold Market”. It has said that leasehold has “far too many problems including disproportionate costs to extend leases; poor value property management; and a slow and costly sales process”.

As we reported in a Law-Now in December 2017 the Law Commission has been tasked to address problems with leasehold. It has presented its 13th Programme of Law Reform where two projects affecting residential property law were announced being Residential Leasehold (Project 1) and Unfair Terms in Residential Leaseholds (Project 2).

Project 1 identified three areas to be addressed;

1. Commonhold;
2. Enfranchisement;
3. Regulation of managing agents.

Commonhold is being now being tackled as a first step.

Spotlight on Commonhold

Commonhold was introduced in 2002 as an alternative to leasehold ownership of property. It enables freehold ownership of individual property e.g. a flat within a building or development where a person becomes a member of the “commonhold association” through which a building is owned and managed.

The reality is that commonhold, mainly because of its complexities, has never taken off in the market with only a handful being set up since the law came into force.

Given the recent response to the Government Consultation in which the existing leasehold system has been strongly criticised, there is now a drive to reinvigorate commonhold. The Law Commission will now examine why commonhold has failed and what changes can be made to existing commonhold law to make it more workable and more attractive as a tenure. To enable the Law Commission to examine all the facts, last week it began an eight week call for evidence on commonhold law. Views are welcomed and must be submitted by 19 April 2018.