What is a Commonhold?

Commonholds are a pretty new form of property ownership in England and Wales. They were reintroduced in the early 2000s and are still not as common as freeholds or leaseholds. But, commonholds offer an opportunity to own a home without the time restrictions and lack of control of leaseholds, and without the full level of responsibility as freeholds.

Below we outline what a commonhold actually is, how they work, and how this type of ownership impacts the conveyancing process.

What does commonhold mean?

‘Commonhold’ is a type of property ownership. It means you own a part - or unit - of a larger building or estate. You’ll have sole rights to use that space, but you’ll also contribute to the maintenance of all the communal areas. If you are in a block of apartments, communal areas might include: the lobby, the stairs and lifts, and the exterior walls of the building.

Is commonhold the same as leasehold?

‘Commonhold’ is a half way between a ‘freehold’ and a ‘leasehold’.

Like a freehold, you don’t have any time limit on your ownership of the property, and you’re responsible for maintaining your own property and land. However, unlike with a freehold, you will be a member of, and contribute financially to, the Commonhold Association. This association looks after the maintenance of the communal areas of the building.

These are like the service charges that you have to pay if you live in a leasehold. But, as a member of the commonhold association you get a say in how much is charged, and what the money is used for. You also don’t have to pay ground rents if you live in a commonhold.

Commonholders also have more of a stake in the building their unit is in. They technically own a part of all the communal spaces on an equal basis with everyone else who lives there.

For more guidance on leaseholds, check out our blog.

How does commonhold work?

A commonhold works by dividing a freehold into shares or units which are owned individually and with no time limit. These could be flats in an apartment building, or houses on an estate. Units can also include garages and parking spaces - so you can own a flat, and the rights to a parking space, without them being physically connected.

If the unit you own is a flat in an apartment building, you will usually own the interior walls, ceiling, and floor coverings, but not the external walls. These are classed as common areas, and are maintained collectively by the commonhold association.

Each commonholder is also entitled to be a member of the ‘Commonhold Association’, which looks after all the communal areas of the freehold. Areas like the stairways, gardens, and the exterior walls of the building. Decisions on what repairs to make and what maintenance to do in the communal areas (for example hiring a cleaner or gardener) are all taken collectively by the people who own and live in the commonhold units. The owners of the commonhold units are also responsible for paying for any communal maintenance decided on.

How is selling a commonhold different?

Selling and buying a commonhold is very similar to buying or selling any other kind of property - until you get to the conveyancing stage. This is the part of the process after a potential buyer puts in an offer, when your lawyers begin the process of negotiating contracts.

Because commonholds have a different legal structure than freeholds or leaseholds, the conveyancing process involves a couple of extra steps:

• The buyer’s solicitor should want to check the ‘Commonhold Community Statement’. This provides information about how the building is managed, and what rules are in place about how units and communal areas can be used. The buyer’s conveyancer will check that everything is in line with regulations, and the buyer’s expectations.

• The buyer’s conveyancer will also check for any outstanding debts owed by the seller to the Commonhold Association. They’ll ask for a ‘Commonhold Unit Information Certificate’ which will detail any outstanding sums due. If there are any debts it’s important the seller pays them off as soon as possible. Outstanding sums can be off putting to buyers, as they will be liable for the debt (and any interest) if they carry on with the purchase. In many cases buyers will pull out of the sale, or ask for a discount to cover the amount.

Because selling and buying a commonhold is slightly different than other types of property, it’s worth talking to a conveyancer with specific experience of the process. They’ll know exactly what extra documents you’ll need, and whether they meet the required regulations.

For more advice on how to pick a conveyancer check out our handy guide.