When living in a leasehold property, you must answer to the freeholder.
But other types of property ownership put you in the driving seat.
One of the lesser-known of these is commonhold.
Read on to find out what a commonhold property is, its benefits, and more.
What is commonhold?
Commonhold is a property ownership model sometimes used in buildings with multiple occupants.
Each resident has shared ownership over the common areas (often called common parts).
It’s their collective responsibility to keep these clean and functioning and plan and fund a budget to achieve this.
What is a commonhold association?
Commonhold owners might form a commonhold association to help better manage their property.
It’s a type of company that each unit holder can become a director of.
How common is commonhold (in the UK)?
In the UK, commonhold properties are scarce.
As of last year, there are only 184 properties registered as commonhold in England and Wales.
There are dozens more in Scotland and Northern Ireland, bringing the total number into the 200s.
Commonhold community statement
Commonhold community statements list commonhold owners’ rights and responsibilities.
This is a legally binding document that lists who is responsible for what. It should also give details about:
- Boundaries for each unit
- Insurance
- Voting powers
- What to do if a commonhold owner has a grievance
- How funds will be raised
- The percentage share that each unit has.
Commonhold owners who don’t have one of these documents are strongly recommended to get one (using legal support).
It ensures that everyone’s rights are protected and their responsibilities are clear.
How to find a commonhold property
Retirement properties are sometimes commonhold, which is useful as they often have many shared facilities.
However, many buyers avoid buying these because they can be challenging to sell afterwards.
Look at online listings
Most commonhold properties will be advertised as such on Rightmove or Zoopla.
Ask estate agents
Interested buyers can also speak to an estate agent to see if they’re advertising any.
Check the land registry
If you’re interested in a specific property, you can look it up on the Land Registry. This may give details about whether it’s commonhold or not.
Converting a leasehold
And if you’re exceptionally determined to live in a commonhold property, you can buy a leasehold with the intention of converting it further down the line.
This is a risky strategy. You need other people to buy into the idea; most experts advise against it. You can see more guidance on the conversion process below.
Advantages of a commonhold property
Some people like the commonhold model because it comes with more power, rights and responsibilities.
You don’t have to rely on a freeholder to look after your garden, stairway, hallways, etc. Instead, it’s up to you and your co-habitants.
In other cases, management companies are hired. This maintains commonhold owners’ control but without the time commitment of having to do the tasks themselves.
If someone in a commonhold property sells a property, their commonhold will usually automatically transfer to the new owner.
Some unnecessary costs can be avoided, too. A typical example is ground rent.
But you’ll also avoid your freeholder charging you for unnecessary things, such as repairs on items that (in your opinion) don’t need fixing.
You don’t need to carry out lease extensions on a commonhold property. You own the land indefinitely until you pass it on.
Disadvantages of a commonhold property
You’ll need to collaborate with the other people in the commonhold.
There’s no guarantee that you’ll all get along, so this can create difficult situations.
You can’t always get your own way and might need to compromise on some details.
Some UK lenders are reluctant to lend money on a commonhold, which is considered higher risk. A lender or mortgage expert can provide guidance on this.
You’ll still face plenty of costs with a commonhold, too. If you want to maintain the area property, your service charges could increase.
And it’s expensive to convert a leasehold property into commonhold.
Can I convert from a leasehold to a commonhold?
Yes, this is possible. But you’ll need all parties involved to agree to this. If one person says no, the entire thing can fall apart.
If you approach all unit holders and everyone’s in agreement, bring in a solicitor to help with the transfer. They’ll draft the relevant paperwork and contact your freeholder.
You may need to budget accordingly as there’s plenty of up-front costs.
Not all property experts recommend converting from leasehold to commonhold.
