Commonhold:- Owners in control.

Understand, ask questions, tick the boxes. It may be one of the largest decisions you ever make

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Rental

Easy in – easy out. Flexibility where and how long you live in a home, contracts usually on a 6 month AST (Assured Shorthold Tenancy). At the end of the tenancy contract tenancies may roll forward; thereafter it only requires a few weeks notice from either renter or owner / landlord. Lacks security of tenure. Very expensive compared to buying via mortgage. 

Excellent for those requiring flexibility without commitment.

“Generation Rent”  The government have a Help to Buy scheme to assist purchase on approved new builds. It helps reduce the deposits required, to help break the trap of rental whereby due to the high cost the renters are unable to afford purchase.  

Freehold not Leasehold
Freehold - Most homes (+ apartments within commonhold association)

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Beware of chargeable conditions dubbed "Fleecehold"

Freehold homes should be free from additional annual charges unless they are controlled by the owners.  Unfortunately many of the larger builders have adopted the practice of adding charges by means of a side agreement, too often these escalate rapidly following completion of the development and buyers have little control. If you are buying a freehold property make sure you check out out if there are any “Deeds of Covenant” or “Rent Charges”. Please see our  Fleecehold information.

Commonhold = Freehold homes and apartments. Owners jointly share / control common areas .

Buying a home on a new build estate or an apartment usually means that there are some parts with shared use, it could be a grass area, children’s play area, car park or stairway. Occasionally it could be electric gates and even a method of drainage. In apartments the building walls and roof are also shared use as everyone has to share the cost of maintenance. In city centers there may also be commercial units, shops or gyms sharing.

These are known as the “common areas / parts”.  A commonhold development enables buyers to own their home outright Freehold whilst sharing both the ownership and maintenance of common areas. There aren’t any ground rents and the owners have full control of management / costs….. More

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Freehold Investor
Leasehold = Where the dwelling owners jointly share
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Whats all the fuss about?

Freehold / Freeholder = To ultimately own the property and the land it sits on (after loans have been paid).

Leasehold / Leaseholder = To lease i.e. to rent (leaseholder) from a freeholder on a long term contract. Further payments may be required to extend the agreement and options to buy the freehold may be available.

The Freeholder will also charge annually for various fees. Witholding / non payment of any fees or non compliance of any of the conditions can effectively terminates the agreement and the freeholder can ask the courts to reposess the property.

Dwelling Owners = Own the house or apartment freehold


Buying a home on a new build estate or an apartment usually means that there are some parts with shared use, it could be a grass area, children’s play area, car park or stairway. Occasionally it could be electric gates and even a method of drainage. In apartments the building walls and roof are also shared use as everyone has to share the cost of maintenance. 

These are known as the “common areas / parts”. Documentation should be included with sales details as to which dwelling pays what contribution. Unfortunately many sales/estate agents don’t seem to think this is important to even mention or play the importance down.  

Often the first time buyers are about this is when they have paid a deposit, incurred costs of a mortgage, valuation, building survey and had reports from the local authorities for planning / utilities / coal mining surveys etc.  At this point their solicitor should tell them. 

commonhold
Commonhold = Where the dwelling owners jointly share
commonhold
Commonhold = Where the dwelling owners jointly share
commonhold
Commonhold = Where the dwelling owners jointly share
Asset 26
Ownership of Common Parts

Usually a company is set up specifically to own these shared “common” areas. The company is registered as the “freeholder” – that is the outright owner. 

The company apportion the expenses of maintenance to the “home owners” of the properties in proportion as laid out in the relevant documentation. 

In Freehold properties, typically estates with houses, the individual homes being freehold are owned absolutely by their buyer. The common areas of the development are 

The company often  registered at companies house, it Traditionally the individual homes were leasehold

Responsibilities of the property management.

All owners of our apartments are members (joint owners) of the commonhold association. The association owns outright the freehold of the common areas i.e. non residential areas, building exterior, the roof building, car parking, gardens and is responsible for external lighting etc. 

Our apartment owners therefore own their individual apartments outright and own a share of the common areas. 

Only owners of these apartments can be members as membership transfers with each sale. 

Its good to know that the building and its maintenance will be cared for. That includes insurances and services like gardening. Not having communal entrances with stairways, lifts or electric gates ensures this development remains very economical with low communal charges.

The community association management is also responsible for paying the bills for electric lighting and water used in communal areas. As such they hold accounts money in trust to meet budgeted annual expenses whilst also building a reserve savings account for larger future maintenance commitments. See budgets …..

Members (owners) meet informally to discuss their annual budget of spend for approval. It is an opportunity to have a voice in how their money is spent. 

The maintenance budget / program can be part or entirely self managed, just paying for the services they need or alternatively appoint a professional property management company to manage everything. 

The important advantage is the total flexibility to suit the members and controllability of  any support services, sub-contract management if used, window cleaners, gardeners etc. Members save on insurance commissions and can negotiate a baseline cost. 

Resident owners also know reliable local trades, where money can be best spent – and act proactively to any repairs required before costs accelerate.

No ground rents or external permission fees! It all ensures there can be significant savings over traditional leasehold properties. 

 

Selling

Commonhold members can agree their own nominal costs issuing a sales pack. 

The Conveyancing Association advises leasehold sales are bedevilled with ‘extortionate’ charges and game-playing, when selling. 

 

F.A.Q

Professional Property Management Company (PPMC); They rarely have any investment in the properties but are normally employed to carry out the wishes of the above Owners/Residents Management Company. Like any service company you should be able to hire and fire them, view records etc. They manage the budgets, send out the annual bills to all leasehold or freehold owners, bank the money, instruct and pay the gardeners, insurance and ensure the smooth running of the development. They also charge a pre-agreed amount for their service. Link to sample job description. All the money paid by the leasehold owners should be held in trust for the Residents Management Company. See note 2 They also liaise with directors of the residents/owners management company, discuss and resolves any issues arising.

F.A.Q