A new lease of life: - CentreForum

A New Lease of Life::2 – Leasehold in contextLeasehold todayWe briefly place leasehold in contemporary context in England andWales and will outline how it has evolved over the past hundredyears. There are three forms of domestic property:1. Freehold2. Leasehold3. CommonholdOf these, freehold is by far the most common, used for 90 per centof owner-occupied households. It offers absolute ownership of aproperty and the land upon which it stands. Ten per cent of owneroccupiedhouses are leasehold, giving tenants the right to occupya unit of property for a fixed period until the lease expires and therights to its use revert to the freeholder. Fewer than 160 domesticproperty units are held in commonhold, which offers ownersperpetual ownership of their property as well as a share in themanagement of common parts. 9 This paper focuses on leasehold,which is distinct from both freehold ownership and short-termrental. Like freehold property leaseholds can be sold on the market,with buyers acquiring the rights to a unit under the terms of itslease.Blocks of flats and housing estates sharing common areas bothface the problem of enforcing positive covenants; simply offeringfreehold to each unit would lead to collective action problems ofpaying for public goods (such as maintenance of hallways or repairof roofs). The system of leasehold, with a freeholder holding powersto enforce service charges upon leaseholders evolved to addressthis. Flats can be owned as:9 It is unsurprising that commonhold is the rarest; it is only relevant to flats orhouses on estates and is by far the newest form of property ownership, havingbeen created by legislation in 2002. By contrast, freehold and leasehold tenureshave existed for centuries.13