View all newsletters
Sign up to our newsletters

Support 110 years of independent journalism.

  1. Spotlight on Policy
15 January 2019

Just 20 commonhold properties have been created since 2002

Despite widespread concerns over leasehold system, UK Finance says commonhold alternative is an “academic exercise”.

By Augusta Riddy

While thousands of new homes continue to be sold as leaseholds under a system that Communities Secretary James Brokenshire has called “unfair and abusive”, the Housing, Communities and Local Government Committee has heard that the alternative –  commonhold ownership – remains almost entirely unused.

Commonhold ownership gives each resident of a development freehold ownership of their flat or house, and joint ownership of communal areas, which are managed by a commonhold association made up of residents. It is an alternative to the long-term leasehold model, whereby residents own their property, but not the land it stands on. The leasehold system has been widely criticised in recent years as developers have increased ground rents and charged huge sums to extend leases.

Matthew Jupp, principal of mortgages policy at UK Finance, told the Housing, Communities and Local Government Committee yesterday that he believes the lending market for commonhold properties is “fairly reasonable and functioning” with 40 per cent of mortgage providers willing to lend on this basis. Any reluctance from the rest of market – there are around 340 registered mortgage providers in the UK – to lend to these types of properties, he argued, is due to a lack of precedence.

Jupp told the committee members that the biggest advantage of a commonhold lease was residents’ ability to have greater transparency and a greater degree of control over property costs, avoiding “onerous” charges which can come with leasehold properties, which can also mean that residents find their properties difficult to sell.

However, just 20 commonhold properties have been created since the Commonhold and Leasehold Reform Act came into law in 2002. Jupp argued that this makes it difficult for mortgage providers to assess the risk, and to commit to what he described as an “essentially academic exercise”.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

MPs (including Labour chair Clive Betts and the Conservative Bob Blackman) challenged Jupp that commonhold properties had yet to take off, and put it to him that without access to mortgages, they were unlikely to do so. Jupp responded that “if we started to see more [commonhold properties] being created by developers, then more lenders would be willing to lend on them”.

The Law Society is currently conducting a commission on “Reinvigorating commonhold: the alternative to leasehold ownership” in an attempt to understand why commonhold is not being used. When the commission concludes in March, it will publish proposals aimed at “improving mortgage lenders’ confidence in commonhold to increase the choice of financing for home buyers”. The Housing, Communities and Local Government Committee is currently conducting an inquiry into leasehold reform, which also involves looking at how commonholds can be used more widely.

A UK Finance spokesperson told Spotlight: “Commonhold could be a useful option for property owners in the UK and lenders are open to discussions about how it could be used in the housing market on a wider basis. We put forward several suggestions to the Law Commission last year about how it could operate more effectively for lenders and their customers and will respond to the consultation in due course.”

Content from our partners
Future proofing the NHS
Where do we get the money to fix the world's biggest problems? – with ONE
Labour's health reforms can put patients first

Topics in this article :
Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU