Is commonhold going to become commonplace?
18 November, 2021
In 2002 the Government introduced Commonhold, nearly 20 years later, and with only a handful of blocks of flats owned and managed in this way, the plan is to replace the much vilified leasehold ownership with … Commonhold. Yes that is right! A reinvented Commonhold.
With such a low uptake up until now, there is a lot of work to be done if commonhold is to be brought in successfully. Times have moved on in the last 20 years and developments are more complex and can include mixed use units, leisure, roads and even canals as well as blocks of flats. Nevertheless, the government is determined to press ahead and wants to have a Bill in place for 2022/23.
Currently for a leasehold building to convert to Commonhold, all freeholders, leaseholders, lenders and tenants in a building must agree. That is almost impossible save for the very small blocks and yet conversion of existing buildings successfully may be what developers hope to see before they are prepared to institute it on a new build. It is a chicken and egg scenario, should commonhold be brought in on new builds so that other owners can see that it works, or let people convert and persuade the developers? What the government really needs is a test building to try it on, but who wants to be the guinea pig?
One of the proposals to make the new version of commonhold workable is to reduce the number of people who need to agree from 100% to between 50% and 80%. One could also exclude lenders and tenants in the requirement to consent. A further option is to allow leasehold and Commonhold to co-exist, but it is hard to see how these two very different regimes would work in the same building. Nonetheless, this is potentially the only option to take if one is going to avoid interfering with individual lessee’s property rights. Forcing lessees into commonhold could mean that there would be plenty of test cases in the courts as to whether it is against an owners human rights.
The Government also needs to consider what else must be in place before Commonhold can be brought in. The regulation of managing agents is pressing and the Government will need to have sufficient funds in place to help progress it. Ultimately Commonhold will be market driven and if the last 20 years is anything to go by we may still all be buying and selling leasehold flats for some time to come.
For further information please contact Jane Canham on 01244 400567 or email: jane.canham@storrarcowdry.co.uk
