The Law Commission is currently analysing responses to a consultation on commonhold. Their report is due to be published later this year. The aim is to reform commonhold laws, making it a preferred alternative to leaseholds.
What is commonhold?
You have probably heard of freehold and leasehold properties. But what about commonhold? This is a rare form of property ownership in England and Wales, even though it is popular across Europe, the US and Australia. In fact, there are fewer than 20 commonhold properties in England and Wales.
Commonhold is a type of freehold ownership. It typically applies to multi-occupancy buildings. In practical terms, it means that if you buy a flat, you own it on a freehold basis. You then share ownership of the common areas with the other flat owners. Hence the term ‘commonhold’.
Benefits of commonhold
Most flats in England and Wales are owned on a leasehold basis. Some houses are, too.
However, leasehold ownership has significant drawbacks. You are subject to lease, which only lasts for a set number of years. You are at the mercy of the landlord who owns the freehold. You are also subject to the terms of the lease, which can be complex. If you breach these, the landlord is lawfully entitled to end the lease. This is called forfeiture.
Commonhold overcomes these disadvantages. Your freehold lasts forever, you do not have a landlord, you are not at risk of losing your property, and you have a say in what happens to the common parts of the building. This offers much greater protection, not to mention much more autonomy.
Why is it unpopular in the UK?
But if commonhold is so beneficial, why is it so rarely seen in England and Wales? That is what the Law Commission is trying to find out. In December 2018, it launched a consultation, looking at different aspects of the law which may be preventing its uptake. It suggested a number of proposals and asked the public for their opinion.
The consultation recently closed. Now, the Law Commission is analysing responses from the public, which included homeowners, developers and legal experts. A report on their findings will be published later this year. The government is also researching ways to encourage commonhold ownership.
It is not certain what results this will produce. However, if reforms are implemented, it could lead to more commonhold properties across the country. Only time will tell.
If you want to know more about buying a freehold, leasehold or commonhold property, contact our solicitors for legal advice.