Commonhold: an alternative to leasehold
Buying a commonhold property
If you are thinking of buying a commonhold unit, the procedures should be simpler than for a leasehold flat. There is no reducing term (the length of time left on a lease) or ground rent to worry about, and a lot of the documents you will need are readily available through the Land Registry and Companies House. However, all the documents will still need to be checked carefully and, in most cases, you should ask a solicitor for professional advice on the following.
Commonhold association
You should check that the association is properly registered as a company limited by guarantee at Companies House and that its articles of association are registered at the Land Registry and are written in line with the regulations. You should examine any extra articles and clauses and consider how these might affect how the unit will be managed.
The details registered at Companies House will show the names of the directors and the secretary of the association. If the commonhold has existed for a number of years, you will also be able to check the state of its finances from the annual accounts it has filed at Companies House and whether the confirmation statements have been made. You should also ask for details of the most recent commonhold assessment, the reserve funds and any plans for future spending.
Commonhold community statement (CCS)
You should examine this in the same way as you would examine a lease, to find out how the building is managed and what rules there are relating to how the units and the common parts can be used. As with the articles of association, you should check that the CCS is in line with the regulations.
It is important to check the title documents for the unit against the CCS to confirm the extent of the unit, the area of the common parts, and any limited-use areas (such as a balcony) which benefit or affect the unit.
The CCS will include details of the percentage allocated to the unit for the purpose of the commonhold assessment, any reserve fund charge, and how votes are allocated for decisions relating to the commonhold.
If the commonhold is a new development, it is also sensible to check if the developer has any development rights under the CCS which could affect the unit, for example, are they allowed to build alongside the commonhold building or estate?
Joint owners
If you are buying the unit jointly with another person, only one of you can be registered as the member of the commonhold association. You should decide between you and formally tell the association which of you will be the member.
If you do not tell the association which of you will be the member, you should take care when making the application to the Land Registry to register as unit-holders because, if you have not told the association otherwise, the first name registered on the title deeds will be entitled to be the member.
Outstanding debts
You must check whether the current unit-holder (the seller) owes the commonhold association any money relating to the unit you are buying. Ask them for a commonhold unit information certificate (Form 9), which the commonhold association will fill in. This sets out the debts the unit-holder owes to the association on the date of the assessment, relating to the commonhold assessment, the reserve fund and any interest on late payments.
Since you will buy the unit under the conditions of the CCS, you may have to pay the commonhold association for any outstanding debts when you become the new unit-holder if the association decides to exercise its right to ask you to do this. Hopefully this should make sure the current unit-holder pays the debt before selling the unit, as it is unlikely that anyone would agree to buy it if this would mean having to pay someone else’s debt.
If there are outstanding debts, you should also confirm that there is no legal right registered on the unit, as this could cause concerns to a lender. If there is a legal right to the unit, you should try to agree with the seller that they will pay the debt out of the money made from the sale, so the legal right will be removed.
Notification of ownership
After you have bought a unit, you will be entitled to be registered at the Land Registry as the unit-holder and to become a member of the commonhold association. You must formally tell the association that you are the new unit-holder (Form 10) and register the transfer of ownership at the Land Registry.
- Last updated:
- 24 October 2024
- Next review:
- 22 December 2026
Related content
Overview of the proposals and where to get more detail