LEASE response to ‘Reinvigorating commonhold: the alternative to leasehold ownership’.

We welcome the opportunity to respond to ‘Reinvigorating commonhold: the alternative to leasehold ownership’. We wish to highlight our standpoint is that of an organisation which prioritises the interests of residential leaseholders and to ensure those are adequately promoted and protected as the reform programme is taken forward.

Click here for the full LEASE response

The response is lengthy, and so we briefly summarise our views in paragraphs 1 to 14 below:

1. When should commonhold be possible? (Questions 1-10)

We agree that the practice should change from requiring consent to conversion being obtained from everyone with a significant interest in the property. Of the two alternative ways in which a building might be converted to commonhold explored by the consultation paper we favour the option whereby these leaseholders who do not consent could be given a commonhold interest.
2. What is the procedure for converting to commonhold? (Questions 11-15)
   We agree to the stream-lining of the procedure for converting to commonhold and that any consents given in support of the conversion should not automatically lapse after twelve months. Moreover we agree that (in addition to the freeholder) it should be possible for leaseholders pursuing a claim for collective enfranchisement to apply to HM Land Registry to create a new commonhold.

3. Mixed and multi-block developments (Questions 16-24)
   We agree to the introduction of “sections” within commonhold based on company law principles of class-voting so allowing the different interests within commonhold to be separated out.

4. New commonhold developments and development rights (Questions 25-29)
   We agree that statutory development rights should apply automatically so as to avoid the need to reserve express rights in the Commonhold Community Statement.

5. The commonhold association: its functions and structures (Questions 30-34)
   We are sympathetic to the idea of a commonhold administrator being appointed to ensure that the association is not put in early liquidation.

6. The commonhold community statement (Questions 35-41)
   We agree that it should be possible for the Commonhold Community Statement to impose restrictions on the short-term letting of units and consider that in relation to the private rented sector this should be confined to lettings made for less than six months.

7. Management and maintenance issues (Questions 42-55)
   We agree that the commonhold community statement should contain an express power for the commonhold association to take out directors’ and officers’ insurance.

8. Financing the commonhold (Questions 56-61)
   We agree that it should be compulsory for a commonhold association to have some form of reserve fund. Moreover we agree that it should be possible to allocate to individual units within a commonhold different percentages that it must contribute towards different heads of cost.

9. Responding to emergencies (Questions 62-64)
   We agree that a commonhold association should be able to grant a floating charge and there should be express provision in the Commonhold Community Statement enabling them to do so.

10. The ban on residential leases – possible exceptions (Questions 65-72)
    We agree that an exception to this ban should be made for shared ownership leases containing the prescribed fundamental clauses and that in new commonhold developments the model shared ownership lease should require the shared ownership leaseholder to comply with all terms of the Commonhold Community Statement.

11. Resolving disputes and the protection of minority interests within commonhold (Questions 73-82)
    In contrast to the provisional proposal of the Commission we consider that referral to an ombudsman should be a mandatory part of commonhold’s dispute resolution procedure.

12. Enforcement (Questions 83-86)
    We agree that, before taking action to enforce a charge over a commonhold unit, the commonhold association should be required to follow a pre-action protocol

13. Voluntary termination of commonholds (Questions 87-92)
    We agree that voluntary termination of a commonhold should be possible with either unanimous support or the support of eighty per cent of the available votes plus the approval of the court.

14. The impact and application of commonhold reform in England and Wales (Questions 93-107)
    We agree with the sentiments in the consultation paper that its provisional proposals for reform will have made a substantial impact if they result in commonhold being adopted more widely.