Do you have a leasehold property?

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  • Do you have a leasehold property?

You may soon have to face the commonhold tenure?

The government have been trying to deal with ways when it comes to leasehold for many years and how to improve the current system.

If you own a flat on a lease you would firstly pay a ground rent. This is a figure that is paid every year to the landlord either half yearly or quarterly. In effect their rental payment because you hold the property on a long lease. The government are now putting measures in the new renter’s reform bill to exclude this payment in future.

You also own the property by way of a long lease.

Many people do not realise that at the end of the lease the property is automatically given back to the freeholder. If your lease is short, you should then apply to the landlord for a lease extension. The government has been looking into the ways to review this system as a payment of a premium is normally required to the freeholder for the extension to take place.

The shorter the lease the higher the premium can be. We have recently dealt with quite a few cases for landlords and a lot are under the misapprehension that the law will change to resolve this. It is unlikely that this will be case. The law will more than likely not deal with retrospective leases. If you do have a lease that you believe may be of a short nature do not hesitate to contact us at and we can advise you on this.

Commonhold Tenure.

The government is therefore proposing in future a new commonhold tenure. Commonhold is a form of freehold ownership. It is normally used for flats or other independent buildings particularly quite popular with landlords. There are no third-party landlords. Owners themselves share the control and responsibility of the management of the building. They also deal with the shared facilities and their associated charges.

The owners may choose to employ a professional managing agent to look after the building or deal with it themselves.

This is different from other forms of freehold ownership as commonhold comes with shared responsibilities for owners to repair, maintain and insure building. They can still employ professionals to do so on their behalf, but it is down to each individual collective.

Commonhold Council.

There is a new committee known as the commonhold council. This will provide advice on how to support owners taking on greater responsibilities for their building. This will ensure that services such as lending, property management and the buying and selling are ready to provide for the widespread take up.

This may not suit everybody in future. You may find that you fall out with the somebody in the building and commonhold does have its issues. However, it is found in many parts of the world including, Australia, New Zealand, Canada, and the USA. It is also quite common in Europe. Commonhold currently exists in a form of ownership in this country and legalisation already came in 2004.

Commonhold council will act as an advisory panel of leasehold groups.

It will have industry experts to inform the government on the future of this type of ownership. Under commonhold there are no hidden costs or charges preventing some of the egregious practices currently seen in some leaseholds. Commonhold gives owners more autonomy over the decisions that are made. They are in control of their building and what is known as a building “commonhold association”.

The reason why this comes about is that these are recommendations made by the law commission to simplify the commonhold system. It is expanding its use for both new homes and existing leasehold buildings. However, how the leasehold buildings will work in future under the existing scheme is complicated to say the least. We have spoken to our own solicitors in this regard and their understanding is that it is almost impossible to deal with it retrospectively and it would only really relate to new buildings.

The government over the next 12 months are making various changes to different laws and this is one of the areas that they will be looking at.

Unfortunately, there are new types of legalisation coming in such as;

Notice periods.

These are now being changed from the current 6 months’ notice period which was introduced at the end of August to 4 months. This takes place from the 1st June. Landlords must give at least 4 months’ notice for repossession. There are certain exclusions such as arrears of rent and anti-social behaviour. It is still more than what is previously noted.

Bailiff enforced evictions.

The government have also announced the end for bailiff enforced evictions from the 1st June.

There is a high likelihood that the government will look to extend the 4-month period for some time. They have indicated previously that they were always going to reduce this from the 6 months however we are not so convinced now that they will reduce the 4 months’ notice. If you therefore wish to have your property back at the end of its current term you would need to look at least 4 months in advance if not earlier. Please do not hesitate to contact us to discuss this.

Do you have another property that you currently have rented out? Would you like a free health check to make sure you are legally updated? Do you have this rented out at the right rent? Did you know that the market has moved quite substantially over the last few months and residential rents are now on the increase? Why not contact us to discuss your requirements.

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