Commonhold - Revolution or Turkey?

The Commonhold and Leasehold Reform Act 2002 came into force in September 2004, introducing into England and Wales the concept of commonhold – an alternative to conventional leasehold ownership of flats.

Commonhold flat owners together hold the freehold title to the block of flats and its common parts; each flat owner (or ‘unit holder’) owns his or her own flat.

There will no longer be a landlord. The unit holders’ ownership and management rights will be governed by the rules of a Community Association – a limited company in which each flat owner will be a member and whose regulations will be in essentially standard form.

A person who is not a unit owner may not become a member of the Community Association. This will mean that commonhold blocks of flats will be owned and managed solely by those living or working in them.

Any new block, whether residential, commercial or of mixed use may be structured as a commonhold development, but the established leasehold system of ownership will undoubtedly survive alongside commonhold in many areas.

Existing estates or blocks of flats may ‘convert’ to a commonhold arrangement, provided that all of the owners agree. Where there are large numbers of tenants, this may prove impossible to achieve. There are, to date, no recorded examples of conversion.

New commonhold developments are also rare; developers are no doubt waiting to see how successful other commonhold estates are, rather than venturing themselves into unknown territory.

It remains to be seen whether existing owners of flats and the like will wish to take responsibility for ownership and management of their blocks. The general consensus at present appears to be that they are not and that commonhold may, therefore, be a slow burner, at least in the conversion arena.