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Law Commission proposes commonhold as leasehold alternative

The Law Commission has proposed reforms that it says would help drive the expansion of commonhold as an alternative to leasehold.

Commonhold was introduced in 2002 as a new way to own property, but fewer than 20 commonholds have been built since, reports the commission, citing varying reasons why. These include a lack of flexibility to carter for complex developments and difficulties in converting leasehold into the new system.

The commission says that by dealing with these and other issues through reform, take up of commonhold should improve.

The proposed reforms would see allowance for the development of semi-commercial units, ease of transition to commonhold, and the replacement of service charges with contributions that have to be approved by those paying them. Overcoming shortcomings in the law as it stands would also improve lender confidence in commonhold as a form of ownership, says the report.

The benefits of commonhold over leasehold are that owners own their property outright; there is no landlord, with owners having a stake in the building together; there is no ground rent; because there is no lease there is no corresponding risk of forfeiture; and that standard rules and regulations apply, providing stability.

Leasehold has been a hot topic as of late, with MPs demanding answers from some of the country’s biggest housebuilders in a recent inquiry, and the Conveyancing Association calling for criminal action over misleading sales agents the day before that.

Law Commission commissioner professor Nick Hopkins says: “Commonhold provides a once in a generation opportunity to rethink how we own property in England and Wales and offers homeowners an alternative system to leasehold.

“It involves a culture change, moving away from an “us and them” mindset, towards “us and ourselves”.

“We want to hear what people think of our proposals so we can be sure the commonhold system will work for homeowners and the wider property sector.”

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