urban-943593_1920The Law Commission has announced plans to reinvigorate commonhold as an alternative to leasehold ownership of a property.  Commonhold enables property buyers to own the freehold in a flat while having a stake in the shared areas and structure of the building.

Introduced in 2002, the take up of commonhold has been slow and only 20 have been created so far.  Developers’ and homeowners’ concerns include difficulties in raising mortgage finance, lack of flexibility to accommodate mixed-use schemes and concerns about how the common costs of ownership are met.

The Law Commission’s proposals are intended to address these concerns.  It wants commonhold to be used for larger, mixed-use developments and to allow shared ownership leases and other forms of affordable housing to be included.  It also plans to make it easier for leaseholders to convert to commonhold and to enable homeowners to end unattractive long-term contracts imposed by developers.

The proposals include ideas to increase mortgage-lenders confidence in commonhold and to give owners greater control over the running costs of their commonhold.

The Law Commissioner, Professor Nick Hopkins, believes commonhold involves a culture change.  “Commonhold should not be looked at through the lens of leasehold,” he said.  “It moves away from an ‘us and them’ mindset, towards ‘us and ourselves’”.

James Burgoyne, Director – Claims & Technical, Brunel Professions says there has been widespread condemnation of abuses of leasehold, with high and rising ground rents and expensive service charges leading to complaints.  “Commonhold is widely used in other countries and has been proposed as a good alternative to leasehold.  Hopefully the Law Commission’s proposals will revive interest in it as a viable ownership model.”

The Law Commission’s consultation and press release are available on its website.  Reports on the move have been published by The Law Society, Mortgage Finance Gazette and Walker Morris.

Brunel provides a wide range of Professional Indemnity Insurance broking services to property professionals.  Click here to find out more, or call Mark Sommariva on 0203 475 3275.