Conveyancers call for revival of little-used alternative to leasehold

The Conveyancing Association is calling for a review of property ownership tenures as part of its response to the leasehold reform consultation.

The Government consultation closed this week and one idea the trade body is advocating is replacing leaseholds with commonholds.

The commonhold alternative was introduced under the Commonhold and Leasehold Reform Act 2002.

Under commonhold, all residents are given a say in the management of the building.

It allows residents, for example, in a block of flats to own both the land and property. There is no landlord, freehold or lease, so the value of someone’s home doesn’t get threatened as a leasehold home does once the number of years left declines.

There is limited data on the take-up of these schemes but critics claim it is limited, as all residents as well as the developer, any lenders and freeholders have to agree to the switch.

Beth Rudolf, director of delivery at the Conveyancing Association, said: “Some refer to commonhold as a ‘failed tenure’ when in fact academics in a recent review could only come up with half a dozen technical flaws.

“The real reason commonhold is yet to take off is because of home builders and lenders.

“As was stated at the recent All Party Parliamentary Group for Leasehold Reform meeting, commonhold could only come in if there was a ban on creating value out of leasehold.

“Why would any builder, mindful of their profit line, choose to give up the asset value created by leasehold? Unless you are a business that specifically sets out to create affordable housing.”

If the Government doesn’t go for reviewing commonhold, Rudolf argues leasehold should only be applicable where there are genuine shared amenities and the term of the lease should be 999 years with a peppercorn ground rent.

The trade body is also calling for clearer fees and a redress scheme

Rudolf said: “We are aware that the Government may not opt for this solution and, that being the case, we wanted to spell out the red lines that need to be drawn to ensure that no leaseholder is left in the situation that many people find themselves in, and which have hit the headlines in recent months.

“That means defining when leasehold can be used, minimum lease terms, peppercorn ground rents, reasonable fees, and access to a redress scheme.”

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3 Comments

  1. Will

    May be Government should have driven common hold forward rather than just leave it as an option?

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  2. Anthony

    Some very well thought out suggestions and from Solicitors, who would have thought!!
     
    I don’t want to sound like a socialist but as a letting agent we feel that some of the fees our landlords of leasehold property are being charged for “permission to let” are plain “silly”. Landlords of freeholds appear to be holding all the cards, no redress, no negotiation & no ombudsman, things need rebalancing.

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  3. Anonymous Coward

    There is a problem with commonhold and the problem is people.

    It is difficult to get people properly involved and engaged in anything these days – it can never work because in most cases you will have 1 or 2 people trying to make it work who get lumbered with all the hard work, some people who are interested but won’t help and then the loudest noises in the room are the 1 or 2 people who don’t understand and have not researched the issues or often don’t care about them. They will ALWAYS have the most idiotic and entrenched ideas about what’s right or not for them and will argue their moronic position until everyone else just gives up in disgust.

    As broken as the leasehold/ freehold system is – it WORKS…

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