A new lease of life: - CentreForum

A New Lease of Lifeservice charges and reserve fund contributions 33 are paid to themanager (themselves or an appointed management company).As the Labour Party stated in 1995, precisely because it allowsleaseholders to access their rights, an effective RTM will “provide aproper incentive to landlords and their managing agents to delivera high quality and cost effective service”. 34 For this to work lesseesmust be both aware of this right and subsequently able to act andtake advantage of it. It can be hard to garner the support of half ofthe lessees in a large block of flats especially if, as one recent surveyshowed, more than 60 per cent of leaseholders do not even knowthat they have the RTM. 35CommonholdCommonhold, created by the Commonhold and Leasehold ReformAct 2002, is a form of tenure that allows residents of flats orhousing estates to shift away from the system of long leasehold.The advantage of this, over collective enfranchisement, is thateach resident owns the freehold of their ‘unit’ 36 and a share of thecommonhold association (CA) in perpetuity without any leases toextend. Another crucial distinction of the commonhold is that ithas regulatory requirements that specify the rights and obligationsof the unit holders under the CA. Documentation is standardisedacross developments unlike leasehold where rights and obligationsare specified in the individual leases, which can vary significantly. 37The conveyancing process is simpler and quicker for commonholdthan leasehold as it has a standardised agreement and does not facelease or title issues. However, it is not easy to shift to commonhold– the Act stipulates that the creation of a CA requires unanimousresident support and the process of moving to commonholdcan only be begun once residents have completed collectiveenfranchisement. Because of the barriers of shifting from leaseholdto commonhold, it is more realistic to see it as an alternativetenure type for new developments than as a solution for existingleaseholders.33 Also known as a sinking fund, it is used to offset and spread cost of large capitalinvestments.34 F Dobson and N Raynsford, ‘An End to Feudalism: Labour’s New LeaseholdReform Program’, October 1995.35 Survey conducted by Wriglesworth Research on behalf of Urban Owners,December 2010.36 A flat, and potentially a garage, for example.37 Office for Fair Trading (OFT), ‘Property managers in Scotland – a market study:Annexe G - International comparisons’, February 2009.22