Commonhold must replace old fashioned leasehold system

The above picture is the commonhold scheme in Bristol

 

Commonhold must replace old-fashioned leasehold system

 

England and Wales are one of the few countries in the world with a leasehold system that has its origins in feudal time. You can pay thousands for a lease and become a mere tenant when the lease expires. It is a wasted asset. It is a time limited form of home ownership.  Leaseholders have to pay ground rent to a freeholder who will charge permission fees to put up conservatories or to install solar panels.

If you are buying a leasehold property with a ground rent over £250 (over £1,000 in London), then the lease falls within the Housing Act 1988 and will be an assured shorthold tenant. This has been an important issue in the North of England. Builders have sold leases with escalating ground rent clauses that are lending organisations will not grant mortgages. These properties become unsellable.

Nearly all of the English-speaking world has done away with the leasehold system. American has the condominium system. There were ground rent riots in New York in 1840s. An anti-rent party was set up. Scotland has abolished the leases though it has a different legal system. Australia and Canada have the strata system.

 

Legislation was past in 2002 to introduce the commonhold system into England and Wales. Commonhold was to be a new type of freehold tenure. A commonhold association would be set up as a company who would own the common parts of the building. Every resident would own their flat and would have a share in the commonhold association. Residents would elect directors to run the block or could appoint professional agents to do so on their behalf. There would be no freeholder involvement. The rights and obligations of residents would be set out in a commonhold community statement.

The system failed as the legislation was badly drafted. It was not made compulsory for new developments. All residents in a block and their mortgage holders  had to agree to convert to commonhold. In practice it was impossible to obtain the consent of all flat residents. As a result, only a handful of commonhold properties have been created.

In April 2020, the Land Registry revealed 160 commonhold properties in England and 25 in Wales. There are over 4 million leaseholders in England and 235,000 in Wales.

Due to pressure from leasehold campaigners and the Labour Party, the current Government has asked the Law Commission to re-invigorate the commonhold concept. The Government has announced that it will bring forward plans to introduce commonhold. (https://bit.ly/3fmt3Mq). A commonhold council will be introduced consisting of leaseholders, developers, and others to prepare the market for the introduction of commonhold. The exact nature of the new legislation will depend on how active campaigners are to prevent the Government from protecting the building industry.

 

 

Here is a  list of  of the first 15 commonhold developments in England and Wales.

 

This list is taken from the Leasehold Knowledge Partnership website. See https://www.leaseholdknowledge.com/the-15-commonholds/ I have included details of the local Member of Parliament, the google earth picture and details of the commonhold association company. This information is freely available.

 

1/ 70 Northern Grove, Didsbury M20 2NW Jeff Smooth MP Labour Manchester Withington. Built 2005. Three units.

70 NORTHEN GROVE COMMONHOLD ASSOCIATION LIMITED

Company number 05443258

 

Picture https://www.instantstreetview.com/@53.423365,-2.24476,311.4h,10.5p,0z

2/ 23-27 Victoria Road, Darlington DL1 5SF. Peter Gibson MP Tory 2005. Nine units.

https://www.instantstreetview.com/@54.522027,-1.555476,27.64h,6.73p,0z

3/ 
Rookery Corner, Damory Street, Blandford Forum DT11 7GA Simon Hoare MP for North Dorset Tory. 2005. 14 units.

https://www.instantstreetview.com/@50.857836,-2.161026,-89.72h,5.19p,1.02z

4/ Pithers Court, North Street Crewkerne TA18 7BL. 2005.  22 units. Marcus Fish MP for Yeovil, Tory

PITHERS COURT (NUMBER TWO) COMMONHOLD ASSOCIATION LIMITED

Company number 05530173

https://www.instantstreetview.com/@50.885985,-2.795934,102.1h,5p,1.09z

 

5/ 
Grove Court Mews, Pembroke SA71 5PF. 2005. 24 units. Simon Hart MP for Carmarthen West and South Pembrokeshire

https://www.instantstreetview.com/@51.67091,-4.911076,158.44h,5p,1.09z

https://www.fbm.co.uk/properties/13226932/sales

This looks like a new build development, but I cannot find the planning application.

6/ Lazy Days Caravan Park, Minster on Sea, Sherness Isle of Sheppey ME12 4JB Non-residential (meaning cannot be permanent homes). 2005. 30 units.

I visited this site on 22 March 2021. The site was owned previously by a Canadian. Canada has a system of strata title which is similar to Commonhold.  He set up the Commonhold Association. One long standing member told me that the charges were better value under commonhold. The Association is only for over 50’s.

 

The local council requires occupation for only 48 weeks. Commonhold Association can be set up in advance of building by developers or groups.

 

Gordon Henderson

Conservative MP for Sittingbourne and Sheppey

https://pa.midkent.gov.uk/online-applications/files/6FDA8E0DE166A99AEEAC36B1FF53DB03/SW_12_0358-REPORT_TO_PLANNING_COMMITTEE_-_26_APRIL_2012-1361608.htm

 

7/ 11 St Peter’s Road, Sheringham. NR26 8QY 2005. Three units. Duncan Baker MP for North Norfolk. Tory

https://www.instantstreetview.com/@52.94238,1.208485,92.29h,9.09p,0.17z

8/ 
12 Westbourne Park Road, Bournemouth BH4 8HG Conor Burns MP Tory 2006. Four units.

https://www.instantstreetview.com/@50.718861,-1.90616,-83.68h,5p,1z

9/ 34 Church Road, Leyland. Lancashire PR25 3AA 2006. Six units. Katherine Fletcher MP for South Ribble. Tory

https://www.instantstreetview.com/@53.68888,-2.694009,177.1h,5p,1z

10/ Middlewood Road, Poynton Stockport SK12 1TU. 2007. Four units. David Rutley MP for Macclesfield Tory Whip

https://www.instantstreetview.com/@53.355907,-2.085911,-126.28h,13.32p,0z

11/ Sandgate Road, Folkestone CT 20 2HT Damien Collins MP Tory 2007. Ten units.

https://www.instantstreetview.com/@51.076287,1.163646,170.17h,5p,1.09z

 

Terlingham Flats Commonhold Association Limited

12/  
78 High Street, Swinderby, Lincoln LN6 9LU 2007. Three units. Doctor Caroline Johnson Conservative MP

https://www.instantstreetview.com/@53.158181,-0.701655,113.56h,5p,1z

13/ Spire View, Pickering YO18 7DE. 2008. 15 units. Kevin Hollinrake MP for Thirsk and Malton. Tory

https://www.instantstreetview.com/@54.244181,-0.773343,-8.02h,-7.24p,2.71z

14/  
69 Hamilton Terrace, London NW8 9RE Karen Buck MP 2008. Four units.

https://www.instantstreetview.com/@51.529478,-0.180088,-121.09h,5p,0.93z

15/ 
228 Mina Road, Bristol BS2 9YP Thangam Debbonaire MP 2009. Six units with workshops for hire.

https://pa.bristol.gov.uk/online-applications/applicationDetails.do?keyVal=KGYOHSDN00K00&activeTab=summary

http://www.wildgoosespace.org.uk/about/ Applicant for planning permission was the Ashley Vale Action Group who are a self-build group. Quoin Commonhold Association. Conversion of derelict office.

More details here.

https://selfbuildportal.org.uk/case-studies/ashley-vale/

 

The commonhold concept has wider implications for Government policy. The self- build scheme in Bristol converted a derelict office into housing with workshops provided. Government should encourage more schemes of this nature to increase the supply of residential accommodation.

 

The scheme in Kent was set up by a previous owner who was from Canada where strata tile has replaced the leasehold system. Residents on this site own their mobile homes and the land they sit on. On other mobile home sites they do not own  the land and have to pay fees to the site owner. This has been a contentious issue which has lead to the passing of legislation to protect mobile home owners. Under commonhold residents are able to manage the site in a more transparent manner and can decide how their money is spent.

 

 

 

 

 

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Showing 2 comments
  • Glyn Thomas
    Reply

    I thought that your blog is excellent. The most important thing is to get a wider readership as possible preferably on social media. A few more pictures would be good too. Whilst some people will be familiar with commonhold not so many will familiar with strata tenancies in Australia and Canada. At some point it might be a good idea if your were able to write a short article about then and similar schemes in the USA.
    Best Wishes

    GLYN THOMAS

    • Dermot Mckibbin
      Reply

      Glyn,

      Thanks for your comments. I have posted on Commonhold Mark 2 today.

      Regards

      Dermot

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