A new lease of life: - CentreForum

A New Lease of LifeThe burdens of some controls can deter residents from becomingdirectors of a residents’ associations and more appropriateregulations would recognise the removal of many leaseholderfreeholdertensions when leaseholders assume control.CommonholdCommonhold is a preferable system of property ownership toleasehold. It removes the need to extend leases and affords flatowners collective control over management of their property. Itis used in similar forms across the rest of the world, from NorthAmerica to Australia. Yet it has failed to catch on in England andWales.The biggest barrier to the spread of commonhold is a lack ofunderstanding and experience – this applies to buyers, mortgageproviders, developers and investors. One of the challenges is thatdevelopers favour leasehold, which allows them to sell both theleasehold and the freehold and many perspective buyers are notaware that commonhold exists. In essence, there is little supplyand little demand. In large part, the lack of supply is due to lack ofconsumer awareness. It is ten years since the original legislationwas passed, so now would be a good time to review the policywhich could precede efforts to breathe new life into commonhold.There are two sectors that must be addressed if commonhold is tobe a success. The first is the 1.5 – 2.5 million existing leasehold units.The second is the potential commonhold units that will be created inthe future, including existing buildings which will be converted intoflats and importantly, new housing developments. The governmentshould place particular emphasis on new developments because,due to the complexities of converting existing properties, this isa more realistic way to develop a critical mass of commonholdunits. 109New developments are not being sold as commonhold currentlybecause the vast majority of benefits go to the buyers, ratherthan developers who see little gain from switching. To encouragedevelopers to go down the commonhold route, the incentivesmust be altered. 110 This could include legislating that all new109 These policies to promote commonhold should be introduced alongside a reviewof how commonhold has functioned in cases where it has been adopted.110 This is particularly necessary because current property demand and lack ofalternative forms of flat ownership mean that developers can sell leasehold flatsand do not need to explore commonhold.66