A 13-year-old property ownership system branded by critics as a 'failed tenure' could be the answer to eliminating leasehold abuse, a trade body has suggested.
The Department for Communities and Local Government's Tackling unfair practices in the leasehold market consultation closed last night. The Conveyancing Association, in its response, says the commonhold system could tackle problems related to new-build leasehold houses, such as developers imposing escalating ground rents .
Part 1 of the Commonhold and Leasehold Reform Act 2002 came into force in September 2004, creating a new way of owning freehold properties which have communal facilities. The unit-holder owns the freehold interest in the unit and is a member of a commonhold association, which owns and manages the common parts.
Each commonhold has a community statement, which specifies the properties within the development and the rules of that commonhold.
The Commonhold Regulations 2004 govern the formation, running and termination of commonhold communities. The Commonhold (Land Registration) Rules 2004 govern the documents that should accompany applications which are made to HM Land Registry.
Beth Rudolf, the Conveyancing Association's director of delivery, acknowledged that some people refer to commonhold as a 'failed tenure'.
However, she said: 'The real reason commonhold is yet to take off is because of home builders and lenders. As was stated at the recent all-party parliamentary group for leasehold reform meeting, commonhold could only come in if there was a ban on creating value out of leasehold. Why would any builder, mindful of their profit line, choose to give up the asset value created by leasehold? Unless you are a business that specifically sets out to create affordable housing.'
However, should the government decide to retain leasehold, the association has outlined alternative suggestions.
Leasehold should be applicable only where there are genuine shared amenities, and the term of the lease should be 999 years with a peppercorn ground rent, the association says. Administration fees should be based on a reasonable tariff. Leaseholders must have access to a redress scheme.