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01 October 2020

Will the Law Commission’s recommendations for reform of leasehold and commonhold succeed in its avowed intention of ‘Making our homes our own’?

It was interesting to hear from Professor Nick Hopkins in his Blundell Lecture on 30 September exactly what thought processes drove the Law Commission’s recommendations to reform the leasehold and commonhold regimes in its report earlier this year.

In a nutshell these were that:

  • leasehold fails to fulfil the desire for true ‘ownership’ to which home owners aspire, because too much financial interest in (and control of) their homes remains vested in the landlord. They seek to redress that balance by recommending that it is made easier for leaseholders (both individually and collectively) to buy the freehold and exercise the Right to Manage their block, that the term of extended leases should be 999 years and that the amount of landlords’ costs which must be paid is reduced; and
  • leasehold was never designed to fulfil the function it now does and the answer to its failings is not reform but replacement by the system that was – commonhold.

The challenge is to achieve the cultural change amongst stakeholders in the development of residential property which will see commonhold recognised not just as a viable alternative to leasehold but as the preferred option.

Whilst the Law Commission’s recommendations for changes to the commonhold system undoubtedly address some of its perceived shortcomings, it is unlikely they will be sufficient to address this challenge. Most likely that requires either developers to voluntarily adopt commonhold as the preferred structure for future residential (and mixed use) schemes or for government to force them to do so by legislating. Whether either has the appetite for such action at this point remains in doubt.

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