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If the draft Commonhold and Leasehold Reform Bill ultimately becomes law, we will have a new form of tenure in English land law. The Labour government came to power having made a commitment to introduce a new form of tenure for multi-unit properties, the Commonhold, and to "make further radical reforms to residential leasehold" legislation.
The draft provides that before land can be commonhold land there are 3 essential conditions:
(i) the freehold estate is registered as an estate in commonhold land
(ii) a commonhold association (which must be a company) with the object of exercising functions in relation to the land must exist and
(iii) a commonhold community statement must confer and impose rights and duties on the commonhold association and the unit holders. All parties with an interest in the land must consent to its registration as a commonhold.
Each unit holder will have a fee simple interest in the commonhold unit. Membership of the commonhold association is effectively carried with ownership of the commonhold unit. The fee simple interest in the common-parts of a commonhold development will generally vest in the commonhold association. The effect of a commonhold development will therefore be that people will be freehold owners of their flats and shareholders of the company that owns the common parts. The rights and obligations that would previously have existed between landlord and tenant and were set out in the lease will now exist between the unit holders and the commonhold association and be set out in the commonhold community statement. The land included in a commonhold development can be reduced or extended subject to the vote of sufficient members of the commonhold association at a properly convened meeting. The association will collect the commonhold assessment that will effectively replace service charges.
Existing multi-unit properties will only be able to convert to a commonhold arrangement if 100% of the leaseholders and the freeholder consent. On conversion all leasehold interests will cease to exist.
The management of commonhold land will be determined through the commonhold association by the members' votes. The commonhold community statement will determine the majorities required for different types of decisions, the accounting requirements, and the machinery for determination and payment of the commonhold assessment.
Half of the draft bill deals with changes to existing leasehold provisions including
(i) abolition of the residence qualification for an individual's right to a new lease and for collective enfranchisement and a general easing of a number of other requirements,
(ii) opening leasehold enfranchisement to those with extended leases,
(iii) provision for assured tenancies to arise after expiry of extended leases,
(iv) simplification of enfranchisement if landlord is absent,
(v) extensions to the meaning of service charges and the consultation provisions in the 1985 Act and transfer of issues arising to Land Valuation Tribunal's.
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