Independent financial advice - commonhold
Take independent financial advice to discover a new way of owning property
What is commonhold?
Commonhold is a new way of owning freehold property, such as flats, houses, offices and shops, as an alternative to leasehold ownership. Independent financial advice reveals that before the owners of leasehold flats can exercise the commonhold provisions contained in the Commonhold and Leasehold Reform Act of 2004, the joint purchase of the freehold of the building is necessary through the right to collective enfranchisement. Converting the freehold into commonhold requires the unanimous consent of all the leaseholders.
What are the advantages to commonhold?
Freeholders have the indefinite rights to the building and the land on which a property is built. Leaseholders enjoy the rights to the land and property for an agreed period of time, which has to be renewed. Commonhold allows indefinite freehold ownership of individual flats, houses and non-residential units within a building or an estate. Independent financial advice suggests that the major advantage of commonhold for property owners is that possession is not restricted to a set period of time, as it is under the leasehold system.
Wasting assets
As the ownership of the property will be freehold, it will not be a "wasting asset" and its value will not diminish with time as is the case with a leasehold flat. For some leaseholders, it will still remain easier to band together and buy the freehold - for others, commonhold can be a better option. You should take independent financial advice to find out which option is the better for your current situation or if you are considering buying a new property and are unsure as to its status.
Responsibilities
In contrast to leasehold, under the commonhold system, there is no landlord, and every resident or "unit holder" in the property has equal rights. The common parts are owned and managed by a limited company, known as the commonhold association. The common parts are every part of the building that is not contained in a unit. Independent financial advice gives the following example: in a commonhold comprising a block of flats, the common parts will include the actual structure - the walls and roof, the lift and the stairs etc, and common areas such as the corridors, entrance hall and the car park.
Commonhold requires that owners deal collectively with repair, insurance, anti-social behaviour and other matters of mutual interest, so take independent financial advice to see if this will suit your needs. The new system has its origins in American and Australian property ownership laws. Commonhold is similar to Strata Title, a type of home ownership which has been used in Australia for 50 years, and condominiums in the US.
You can have a brighter financial future. If you would like independent financial advice about bridging loans call our experienced advisers today on 0870 803 1995 or e-mail mike.robertson@mraltd.com
