Commonhold 'about control, not service charges'

Commonhold is about giving leaseholders control - not getting away from service charges, a conference on leasehold reform heard today. However scepticism on the benefits of commonhold as an alternative form of home ownership emerged at the Westminster Legal Policy Forum event. 

Commonhold allows a person to own a freehold flat, and be a member of the company which owns and manages the shared areas and structures of the building. It has struggled to gain traction since it was introduced in 2002. After asking the Law Commission to come up with reforms to reinvigorate commonhold as a workable alternative to leasehold, the government consulted on proposals last year.

One audience member said she failed to see how things would improve by moving to commonhold. ‘The controls are going to be better but for property owners the bills are not going to go away. The cost of maintaining the development and land is not going to go away. The maintenance of mechanical elements of the development is not going anywhere,’ she said.

‘There is still a need for compliance in these buildings – whether it’s flick-testing every month, checking the emergency lighting. There is always going to be a bill regardless of what tenure you’re in. Hand out these contracts to private companies and they charge the earth. [Commonhold] is still going to create issues for homeowners. I cannot see how these problems will go away.’

Harry Scoffin, co-founder of campaign group Commonhold Now, replied that leaseholders were paying far more through their service charge than the cost of the service to the landlord. ‘Businesses are not charities. They are there to make a profit. Leaseholders paying the bills [have] the majority financial value in these blocks. People who are paying these bills, living in these properties, who are having their own resale values trashed - give them the control. If people are ripping people off, you fire them. No one is saying "abolish service charges". What I resent is being locked into providers you cannot remove.'

Beth Rudolf, director of delivery at the Conveyancing Association, said: ‘The issue I have particularly in leasehold is if someone does not want to pay, other leaseholders have to foot the bill.’ However, commonhold regulations enable rent to be diverted from the tenancy agreement. ‘How many leasehold flats are let out through the private rental sector and the owners are investors from other countries. That rent can be diverted to pay for the commonhold service charge.'

Commonhold can give leaseholders control and transparency over what they are paying for, Rudolf added.

The government said in June that it would legislate in the next parliamentary session to reform the leasehold system, including 'supercharging' leaseholders' ability to buy their freeholds.

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