Earth quake insurance quote

The right to “commonhold” has been heralded as the biggest shake-up in home ownership laws for 80 years.

There were previously only two main ways of owning property in the UK, freehold and leasehold.

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.

How it works

The commonhold system has been designed to make life easier for people who live in mixed-use properties and should help tenants avoid some of the problems that can arise in these properties.

Leaseholders can complain of absentee landlords who charge high fees yet fail to maintain the properties.

OWNERSHIP EXPLAINED Freeholders have the indefinite rights to the building and the land on which the 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

Property investors can now choose whether to make a new development either commonhold or leasehold and people who are currently leaseholders can also switch to the commonhold system.

For some leaseholders, it will still remain easier to band together and buy the freehold - for others, those in big blocks with commercial property, commonhold can be a better option, but it is by no means .

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 (CA).

Popular?

It is as yet unclear how popular commonhold will prove to be. Developers may prefer to stick with the freehold/leasehold system, which they feel better protects their commercial interests, and leaseholders may be deterred by the fact that the switch process is complex.

Commonhold will allow them to be of their own properties Land Law Minister David Lammy Find out more about commonhold

Land Law Minister David Lammy said the introduction of commonhold would improve housing choice.

“Flat owners now have a new way of owning their homes and managing the building of which they form part,” he said.

“Commonhold will allow them to be freeholders of their own properties and to deal collectively with repair, insurance, anti-social behaviour and other matters of mutual interest.”

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.