Commonhold

Brief overview

Commonhold is a new form of land ownership available in England and Wales. A commonhold consists of both units and common parts. The units are individual freehold properties properties, such as flats, offices and shops. The owners of freehold units are called unit-holders. The common parts are any part of a commonhold development which is not a unit. This could include shared facilities such as the roof, stairs and landings. The common parts are owned and managed by a limited company called the Commonhold Association (CA). Membership of the CA is restricted to unit-holders. Therefore, unit-holders have two different interests in commonhold. The first is a direct interest in their unit and the second is an interest in the membership of the CA.

The CA is required to manage the Commonhold in accordance with the terms of the Commonhold Community Statement (CCS). The CCS sets out the extent of the commonhold properties, the rights and obligations of the CA and unit-holders and procedures for dispute resolution. The CA must be registered at Companies House and have both a memorandum and articles of association. The CCS, memorandum and articles should all be registered at HM Land Registry.

Commonhold is an alternative to long leasehold of flats and other independent properties. The main benefits of Commonhold over leasehold are that:

• commonhold does not loss its value over time in the same way as leasehold, as it does not have a deminishing lease term;
• there is no need for a landlord - the CA and unit-holders manage the commonhold;
• the commonhold documentation is largely standardised, making it easier to indentify unit-holders’ rights and obligations; and
• there is only one set of documentation for the whole commonhold.

You can get more information on commonhold on the Department for Constitutional Affairs website.

You can find out which lenders accept commonhold as security by checking their Part 2 instructions in the Lenders’ Handbook for England and Wales. The Lenders’ Handbook provides comprehensive instructions for conveyancers acting on behalf of lenders in residential conveyancing transactions.