Overview of commonhold
Why it has been introduced
Why commonhold has been introduced
Historically, most flats in England and Wales were leasehold properties. This is partly because the enforcement of positive covenants, such as to maintain support for parts of buildings, has only been available with leasehold land. Commonhold overcomes this problem and offers an alternative to creating a lease and having a landlord.
Commonhold differs from long leasehold ownership in that:
- there is standardisation of documentation;
- the commonhold community association ('owned' by the unit holders) manages its own affairs without reference to a third party landlord
- dispute resolution procedures exist as an alternative to the court process.
The use and maintenance of the units and the rights and duties of the unit holders and the association are contained in the commonhold community statement, which is the central document of the whole commonhold community.
Another advantage with commonhold is that the land, being freehold, retains its value, whereas under leasehold ownership the value decreases as the term of the lease nears its end. This diminishing value can affect a leaseholder's ability to obtain a mortgage.
The next page looks at the documents that are essential for the creation and management of a
commonhold.
