Commonhold Reform: A Scottish Perspective
DOI | 10.3366/elr.2021.0675 |
Published date | 01 January 2021 |
Date | 01 January 2021 |
Pages | 94-100 |
Author |
Feudal abolition
Leasehold home ownership: buying your freehold or extending your lease;
Leasehold home ownership: exercising the right to manage; and
Reinvigorating commonhold: the alternative to leasehold ownership.
On reading these titles, a Scottish property lawyer is likely to have a sharp intake of breath at the idea that a lessee can be said to have ownership. The glossaries to the three reports, however, explain that “freehold” is a “form of property ownership that lasts forever”. In contrast, “leasehold” is a “form of property ownership which is time-limited (for example, ownership of a 99-year lease)”.
The fact that many homes in England and Wales are held on leasehold has long been controversial. There are two principal reasons: first, it is time-limited and secondly, control of the property is shared with the landlord. The latter feature has a resonance again with the feudal system. For property developers, leasehold is attractive because of future rental income.
High-level policy decisions in relation to home ownership must be left to politicians. Thus, the UK Government has already committed to banning the sale of houses on a leasehold basis.
In England and Wales, flats are typically held on leasehold tenure. The principal reason for this is a major fault line between land law north and south of the border. In freehold tenure, English law is unwilling to accept positive obligations, such as a duty to maintain or to pay a share of maintenance, which bind successor owners.
To address this deficiency in English law, a new form of land tenure known as commonhold was introduced by the Commonhold and Leasehold Reform Act 2002. Under it, the flats in a building are individually owned, but the shared areas are owned and managed by a company run by the flat owners, known as the commonhold association. The day-to-day management in practice is contracted out to agents, in a similar way that factoring is common in Scotland. The principal advantages of commonhold are that the ownership is perpetual and there is no landlord to whom rent is due.
In practice, however, commonhold has been a failure. Research published in 2015 found that fewer than twenty...
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