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| 17 December 2018

Is Commonhold the Future?

In 2002, the government created the Commonhold Act, which received Royal assent in 2004. The intention of the Commonhold Act, amongst other things, was to create a new form of ownership of flats, known as commonhold.

Commonhold differs from leasehold, in that each flat is an individual freehold, with there also being the freehold of the common areas of the building. An individual would own the freehold of their flat, but then be a member of a commonhold association which owned the freehold of the common areas.  The management of the building therefore is undertaken by the commonhold company, and therefore by the flat owners collectively.  Whilst they can appoint a management company, ultimately any decisions relating to the building are theirs.

Commonhold would remove the problem of the devaluing lease entirely, and there would never be any need for enfranchisements or lease extensions. Commonhold therefore appears to be a very sensible method of ownership.

Despite this however, the take-up of commonhold has been minimal.  In a recent article published by the BBC, they confirmed that only 20 commonhold developments have been created since 2004.

Whilst there are likely to be changes to the rules concerning leasehold ownership moving forward, and particularly to lease extensions and enfranchisements, ultimately we do not know yet how wide ranging those reforms will be, and whether they will provide cost savings to the individual leaseholder's.

Commonhold therefore appears to be a missed opportunity, that may resolve a number of the current issues.

Should you have any queries concerning either leasehold law, or indeed have any further queries in relation to commonhold, please do not hesitate to contact Lorraine Lancaster of our Real Estate Litigation Department on 01702 338338 or llancaster@paulrobinson.co.uk

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