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Questions About Commonhold Property Ownership
Commonhold is a form of systematic shared property ownership used for multi-occupancy real estate like a building housing a number of apartments and flats.
While this type of ownership is not practiced in many parts of the world, it is applied in major developed nations like America and the United Kingdom.
So it is not something to turn a blind eye to.
First brought into being by the Commonhold and Leasehold Reform Act 2002, it was meant to be an alternative to typical leasehold property ownership so that home buyers have an additional option to ponder over.
Commonhold property, like leasehold, is governed by the lease.
The difference here is that there will be no outside freeholder. This is because the development is built specifically as commonhold property.
The building will also be segmented into common areas and divided into units just like leasehold. But the owner of the common parts will be the Commonhold Association.
This association serves the various functions of landlording like management, mediating disputes, and basically the fundamental activities of landlording.
If you are considering the purchase or rental of a flat with such ownership tenure, more specific details should be made available by the Association registered at the Land Registry.
It is important to note that Commonhold ownership is, at this point of writing, an option. Developers tend to still prefer the tried and tested leasehold form of ownership. So do regular home buyers as this is not an ownership structure people are typically familiar with.
Yet there is no doubt that we will be seeing more and more real estate implementing this form of ownership structure in the future.
Another material difference between commonhold when compared to leasehold is that there is no specified lease period making it look more like a freehold. Meaning the former does not depreciate in value in the same manner leaseholds are subject to as it approaches the end of the lease.
However, like leasehold, disputes in commonhold property can be taken to court. This is one of the reasons why investors and buyers are still confused between the two.
In summary, commonhold property ownership structures are still very new in the very old business of real estate.
It is strongly suggested that you seek the advice of a credible real estate attorney to understand it in a more in-depth manner before proceeding with purchase.
It won’t be a surprise to find lawyers who
Because we are so familiar with how leasehold and freehold estate work, comprehending how commonhold works can be hard to sink in. So don’t buy a unit that you don’t understand.