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How does commonhold work?

This content applies to England & Wales

How commmonhold properties are divided and the purpose of the Commonhold Association.

Unlike leasehold properties, commonhold properties have no overall landlord. Instead, they are owned jointly by the owners of each property (or unit) in the building.

Only a freehold building or piece of land can become a commonhold. The building or land must be registered as a commonhold with the Land Registry.[1]

Commonhold property

A commonhold property is divided into units and common parts. A unit will usually be an individual flat, and can also include areas such as a garage or a parking space. The owner of each unit will own the freehold of that unit. All other parts of the building, such as the stairs and entrance foyer, will be the common parts. The freehold of the common parts is owned by a limited company called a Commonhold Association, and the owner of each property in the building is automatically a member of this association.

The Commonhold Association is responsible for the upkeep and repair of the common parts in the building. All members will have to sign a statement called a Commonhold Agreement or Commonhold Community Statement, agreeing to keep to certain terms and conditions. These will be similar to those usually found in a lease, for example to agree not to cause a nuisance to other residents.

Commonhold assessment

The Commonhold Association will also decide on the commonhold assessment.[2] This is the amount of money needed to run the commonhold, for example for cleaning and for building insurance, and also for the cost of repairs and improvements. It may also be used to provide a reserve or 'sinking' fund to cover major repairs.[3] The commonhold assessment is similar to service charges for leasehold property. Each occupier will have to pay a percentage of the commonhold assessment to the Commonhold Association. The Commonhold Association may also request an additional sum of money from occupiers to cover any emergency works.

As the commonhold units are owned on a freehold basis, possession action cannot be taken against occupiers for non-payment of their share of the commonhold assessment. The Commonhold Association would need to follow the civil debt-recovery procedure to recover any arrears.

[1] s.1(a) Commonhold and Leasehold Reform Act 2002.

[2] s.38 Commonhold and Leasehold Reform Act 2002.

[3] s.39 Commonhold and Leasehold Reform Act 2002.

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