What commonhold means for investors – rethinking risk and return in a changing tenure landscape

Writing on behalf of the Association of Leasehold Enfranchisement Practitioners (ALEP), Katherine Simpson recently penned an article for IFA Magazine examining the UK Government’s white paper on a proposed new commonhold model for homeownership.

Commonhold was introduced in England and Wales in 2004 by the enactment of the Commonhold and Leasehold Reform Act 2002. Despite commonhold models being widespread throughout the world, it has failed to establish itself here, with fewer than 30 commonhold schemes currently existing. The publication of the white paper, The proposed new commonhold model for homeownership in England and Wales is the first step towards the government’s aim to make commonhold the default tenure, effectively eradicating leasehold.

The principle is straightforward; that flat owners should be freeholders to protect their long term interests, and so not limited by the wasting asset that is a lease. They should be allowed to manage their properties and shared spaces directly, without third party landlords who lack a personal stake in the effective management of the building and in the harmony of its residents.

If the proposals go ahead, the sale of new build flats on a leasehold structure will be banned, and the commonhold model will instead be mandatory.

The government also plans to make it easier for existing leaseholders to convert to commonhold. The current 100% of property owners in a block required to consent for conversion is intended to be reduced to 50%…

Read the full article on IFA’s website.