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Last Updated: Saturday, 29 October 2005, 13:50 GMT 14:50 UK
Commonhold tenure take-up low
By Louise Greenwood
BBC Radio 4's Money Box

Houses for sale
Under commonhold possession is not restricted to a set period of time

Take-up of a new form of home ownership known as "commonhold" has been so poor that legislation is needed for it to succeed, according to campaigners.

"Tenure of commonhold" was introduced over a year ago under the Common and Leasehold Reform Act of 2002.

The government had hoped that 6,000 homes a year would be registered as commonhold, including both new builds, and existing leasehold flats converting to commonhold.

But less that 165 newly built homes have been registered so far, the Land Registry has told BBC Radio 4's Money Box.

Nigel Wilkins of the Campaign for the Abolition of Leasehold Reform (CARL) said it is a disappointment as the benefits are clear.

"[It] provides the same level of security as freehold, in that the ownership is a perpetual ownership and is not interrupted at any stage by the intervention of a landlord," he said.

In fact, commonhold was introduced to address some of the problems experienced by people with leasehold flats and houses.

A lease is a time-limited share in a property which reverts to the ownership of the freeholder at the end of that period.

To convert an existing building to commonhold, every person living in the development must vote in favour of the conversion, and so must each individual mortgage lender.

Changes needed?

It has also been unclear whether lenders will offer mortgages on commonhold properties.

Michael Coogan of the Council of Mortgage Lenders said 50 of his members have so far said they will, but the government needs to provide more incentives.

All new blocks of flats should be sold on a commonhold basis
Nigel Wilkins, CARL
"The government has the potential to promote commonhold by saying, we'll give preferential stamp duty treatment if you develop a commonhold property rather than a leasehold."

But Nigel Wilkins said until property developers realise that commonhold flats can sell at a premium over leasehold, the situation is unlikely to improve and the rules should change.

"All new blocks of flats should be sold on a commonhold basis... Looking at leasehold blocks of flats... if the majority of the leaseholders in a block of flats want to convert to commonhold then they should be able to," he said.

The Department for Constitutional Affairs which is responsible for commonhold has told Money Box it hopes take-up will improve but has no plans to introduce more legislation to make it more appealing.

BBC Radio 4's Money Box was broadcast on Saturday, 29 October, 2005, at 1204 BST.

The programme was repeated on Sunday, 30 October, 2005, at 2102 GMT.



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SEE ALSO:
Leaseholders given rights boost
28 Feb 05 |  Business


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