Commonhold

Introduced in 2004 in England and Wales, ‘commonhold’ offers a unique form of property ownership for multi-occupancy properties, presenting an alternative to traditional long leaseholds. Governed by the Commonhold and Leasehold Reform Act 2002 (CLRA) and regulated by the Commonhold Regulations 2004, commonhold enables collective ownership of property freeholds.

A commonhold comprises individual ‘units,’ such as flats or commercial spaces, each owned by unit holders, and ‘common parts,’ including shared amenities like stairwells and roofs, managed by the Commonhold Association (CA). The CA, a limited company whose members must be unit-holders, administers the commonhold in accordance with a Commonhold Community Statement (CCS). The CCS outlines rights, obligations, charges, voting allocations, and dispute resolution protocols.

Operational requirements for commonholds, as detailed in the Commonhold Regulations 2004, include establishing a commonhold association with a standard memorandum of association, articles of association, and CCS. While developers typically set up commonhold associations in new-build developments, converting existing leases into commonholds necessitates agreement from leaseholders, landlords, and lenders, posing potential challenges.

Commonholds offer several advantages:

1. Unit-holders own their units’ freehold, eliminating leasehold devaluation and expiry concerns.
2. The absence of a landlord minimises conflicting interests.
3. Charges are more closely aligned with costs.
4. All unit holders agree on common terms.

However, unit holders bear increased responsibilities and may opt to engage professional management services.

Commonhold properties in England and Wales resemble condominiums in North America.