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Law Commission targets commonhold as better alternative to leasehold

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  • 10/12/2018
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Law Commission targets commonhold as better alternative to leasehold
A consultation has been launched to find out how commonhold home ownership can become a popular and functional alternative to leasehold.

 

Commonhold allows people to own the freehold of a unit within a building or development – such as a flat.

Along with the government, the Law Commission hopes the ownership title could solve some of the inherent problems associated with leasehold ownership.

Yet fewer than 20 commonholds have been created since it was introduced in 2002.

Lenders unwilling to offer mortgages on the properties appear to be one of the reasons commonhold property ownership has not been a success, according to the commission.

But shortcomings in the law governing commonhold and a lack of consumer awareness are all among potential barriers to widespread adoption, the commission said.

Existing financial incentives for developers to use leasehold and inertia among developers are other reasons commonhold may not have taken off, the watchdog added.

 

Commonhold changes

The commission has proposed to allow commonhold to be used for larger, mixed-use developments, as well as shared ownership leases and other forms of affordable housing.

Changes could also make it easier for existing leaseholders to convert to commonhold and improve mortgage lender confidence in commonhold.

Another suggestion is to give homeowners a greater say in how the costs of running their commonhold are met.

The consultation is open until March 10 2019, and at the same time the government is considering wider measures to push commonhold.

Jackie Bennett, director of mortgages, UK Finance said: “Commonhold could be a useful option for property owners in the UK and lenders are open to discussions about how it could be used in the housing market on a wider basis.

“We put forward several suggestions to the Law Commission earlier this year about how it could operate more effectively for lenders and their customers and will respond to the consultation in due course.”

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