Since 2004, commonhold, a distinct type of property ownership, has been available as a third option to add to buying freehold and leasehold, although not many residential conveyancing solicitors yet have much experience in handling this form of contract because it is only gradually becoming better known.
Its provisions allow for freehold ownership of individual flats, houses and non-residential units within one or more buildings of an estate. There is no limit to the number of years of ownership as with a leasehold ownership.
The other main distinguishing feature of becoming a commonhold property owner is that instead of there being an overall landlord, to maintain the building, grounds and areas such as halls and stairwells, each owner becomes a member of its commonhold association, which is a private company governed by the Companies Act.
The aim of the introduction of commonhold property ownership is to remove some of the disadvantages of leasehold ownership, including poor management of the premises, the fact that having a time-restricted lease reduces its value, and that it is easier to obtain a mortgage on a freehold property.
Rights and contributory requirements
Each commonhold owner has their own registered freehold deeds to their home and becomes a unit-holder, whose rights and contributory requirements will be set out in a community statement and collected through the commonhold assessment, which is similar to the service charge of a leasehold agreement.
The directors of the commonhold association, who will have been elected by the unit-holders/owners, are obliged to give an annual estimate in the community statement of how much will be needed to cover the association's costs and overall maintenance expenses.
Commonhold ownership means residents have greater democratic rights than leaseholders over the future of the joint areas of responsibility. Whenever any work or changes need to be made to the building, each owner will have a vote and a majority will be needed for anything to proceed.
The Commonhold and Leasehold Reform Act 2002, which established the commonhold ownership system, also gives rights to leaseholders to act together to acquire their joint freehold and run their own maintenance through a company. This is different to a commonhold association because not all tenants can qualify for collective enfranchisement and there are more regulations which must be met.
Buying a commonhold home through Healys of London and Brighton
Commonhold home purchases are likely to become more popular but any prospective buyer will need to have advice from an experienced residential conveyancing solicitor to ensure they understand the advantages and potential problems of this type of agreement.
Most buildings to which commonhold contracts could apply in the near future are likely to be in cities such as London and Brighton but the legislation extends throughout England and Wales.
Healys' legal teams are approachable as well as professional and keep their clients informed at all stages of every conveyancing procedure. Should any issues arise which are outside the standard home buying administration, the firm has access internally and externally to a range of property experts.
Whether buying or selling freehold, leasehold or commonhold, for more information and advice on costs of Healys' conveyancing services, you can request a call-back via the website, email partner Kiri Kkoshi, telephone 020 7822 4148 or associate solicitor Darina Gowen telephone 01273 669 115.
