What Is Commonhold Ownership? What Are The Disadvantages Of Commonhold?
What Is Commonhold Ownership?
Commonhold is an innovative form of ownership in England and Wales that allows occupants to own their units indefinitely while sharing the ownership and responsibility for common areas and services amongst occupiers.
Under this freehold system, each occupant holds a unit title (flat or house) owner representing the individual’s fractional share of the whole building and its services.
Commonhold also includes a unit management association (UMA), a non-profit organization that provides residents with a low-cost way to manage common areas, provides services such as maintenance, cleaning, and insurance, and guarantees protection from participation fees.
These benefits provide an attractive property ownership alternative that offers flexible access to shared facilities across multiple occupancies.
What Is A Commonhold Property?
Commonhold is an alternative to leasehold ownership of flats and other properties that share communal areas or services, which was first introduced in England in 2002.
It allows owners to own their property as a freehold indefinitely rather than owning it as a leasehold for a fixed period. As such, commonhold provides those who possess the property with increased security and control over how the shared spaces are used and maintained.
This property ownership can give tenants greater freedom when deciding how to use their living space than traditional leaseholds do.
What Are The Advantages Of Commonhold?
- Commonhold provides a secure, long-term form of ownership that eliminates the problems associated with lease expiry and landlord responsibility.
- Property owners control their destinies and collectively make decisions about the building. This ensures that service charges remain reasonable, repairs are made promptly, and maintenance is carried out efficiently.
- Furthermore, each individual owns their unit so that tenancy agreements can be tailored to specific needs without third-party interference.
- Commonhold offers a secure, cost-effective way for property owners to manage their investments in the long term.
What Are The Disadvantages Of Commonhold?
Commonhold property can have its disadvantages, including the responsibility of the Commonhold Association members to enforce the rules in their Commonhold Agreement/Community Statement, which may create tensions between them.
Converting a property to commonhold can be expensive and complicated, which is a deterrent for some homeowners.
How Many Commonhold Properties Are There In The UK?
There are currently 15 registered commonholds in the UK, as indicated by the Leasehold Knowledge Partnership. Commonhold is a legal form of ownership used for flats and buildings with multiple occupiers or owners.
The idea behind it is to give flat owners (or ‘unit-holders’) more control over the property they own, removing them from dependence on the freeholder.
This means that unit-holders can vote and decide how their building is run and managed, ranging from sales of units to how services like repairs and maintenance are handled.
Commonholds also provide a platform for collective land ownership, allowing unit-holders to purchase their share of the ‘Common Parts’ as part of their larger unit purchases.
The currently registered commonholds in the UK are spread across London, Sussex, Gloucestershire, and Birmingham.
Who Owns The Land In A Commonhold?
The commonhold association owns and manages the common parts of the building or estate to which all unit-holders belong.
This company is limited by guarantee, which protects each member financially should the association collapse or be wound up; their liability in such an event is limited to £1.
As such, the commonhold association owns the land within a commonhold structure, with each unit-holder being a part of that structure.