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Not so commonhold: Law Commission consults on the future of commonhold

  • United Kingdom
  • Real estate

17-12-2018

Esoteric and little used, commonhold was introduced in 2002 to address the perceived weaknesses in the leasehold system. Commonhold ownership means that a person is simultaneously the owner of his/her own property, often a residential flat or a plot on a development, and a member of the corporate entity which holds and looks after any common areas. Despite the considerable thought and time that was put into creating this alternative to freehold and leasehold, very few commonhold schemes ever came to be.

That may be set to change in the not-so-distant future as the Law Commission has published a consultation paper seeking views as to why this species of ownership has been so unpopular and what could be done to increase the uptake of commonhold. The Law Commission has already identified issues such as:

  • the difficulty of employing commonhold in the context of mixed-use developments;
  • a lack of lender confidence in the concept; and
  • problems when seeking to convert leasehold interests into commonhold equivalents.

However, the Law Commission also highlights some of the positive features of commonhold including:

  • no need for a landlord;
  • simple mechanisms to make the burden of positive covenants run with the land; and
  • the value of the owner’s interest remaining constant compared with a leasehold interest where value tends to diminish over time.

The consultation closes on 10 March 2019 and is sure to raise some interesting and innovative suggestions.

For more information contact

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