Could commonhold tenure answer the next big property ownership question?
As a relatively new option for property owners, commonhold tenure has not achieved the popularity it perhaps deserves. Not, that is, until now. Commonhold is a property ownership regime comparable with leasehold tenure that could be about to find deserved favour with future residential property purchasers, especially those looking to buy a new flat.
In short, commonhold grants a flat or apartment owner the indefinite freehold tenure of part of their multi-occupancy building, while responsibility for the common areas and services is shared proportionately amongst the owners of all the units in the building. Introduced as an alternative to leasehold by the Commonhold and Leasehold Reform Act 2002, it was fanfared as the first new type of legal estate to be introduced in English law since 1925.
Unfortunately, in the 15 years commonhold tenure has been legally recognised, it has made but little impact on the housing landscape. Few mortgage providers, it seems, were prepared to lend funds for the purchase of commonhold homes, and so the leasehold property status quo was maintained.
Writing here a few months back (May 2017), I shone a light on the toxicity of leasehold ground rents. Since I highlighted this issue, the government has announced radical plans to review current leasehold property policy across the UK. If adopted, the new rules could call a halt to developers selling new-build houses leasehold, and potentially slash any ground rent chargeable on new flats to as low as zero. No longer will housebuilders big and small be allowed to draft leases that include self-interested income streams such as punitive ground rent terms and other money-making tenancy restrictions.
So with the potential decline of the new-build leasehold, perhaps we are at last entering into the commonhold era. Not only does this system bring flat-owners’ ground rent liability under control but it also eliminates the very real threat of leasehold depreciation because commonholds do not decrease in value over time. No more worrying, then, about how much longer your lease has to run before ownership reverts to your leasehold landlord. And no more faceless building management company, either: your building’s common areas – the roof, hallways, foundations and so on – and any services such as lifts are co-owned and managed jointly by all the residents through a commonhold association.
If you would like more information on commonhold ownership, George Ide’s expert residential property team can help. Call us today on 01243 786668 or contact us via email at: mailto:email@example.comGeneral, George Ide, News, Residential Property Conveyancing