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Guide to Common hold - An Alternative to Enfranchisement

Common hold, is a new form of property ownership that allows a broader spectrum of leaseholders, who fall outside of the qualifying rules for enfranchisement, to own, their own flat within a block or conversion. (This type of ownership is not limited to blocks of flats.) It allows them to own their property, in perpetuity and receive all the advantages of owning freehold.  As each flat in a building, block, or estate is freehold, there is no landlord in place to over see the running of the property in respect of such  things as maintenance & repairs, arranging the building insurance etc. In view of this, the property must be managed by a Common hold Association, a limited company set up and comprising of the individual flat owners.

Common hold can only be created out of freehold land, or a freehold building, and comes into effect when the land is registered at the Land Registry as a common hold. This can be in respect of  a new building or an existing building. Once the common hold is in place, the new law provides a statutory framework of rights and obligations between the owners of each flat  (who are referred to as unit-holders) and the Common hold Association set up to run the property.  Each flat owner within the block is known as a 'Unit Holder'. The unit-holder will own a freehold flat but this does not mean they will have complete freedom to act as they wish. The Common Hold Association will have rules and regulation as to what can and cant be done. Certainly, the granting of new long leases will be restricted and there will be other rules relating to letting, up keep, maintenance,  nuisance & insurance, in fact it wont differ to much from a conventional lease. The basic legal framework is very simple:-

1. The freehold estate in common hold land is divided into units and common parts. A unit may be a flat, or may have some non-residential use like an office or shop, and could include a garage or a parking space. During the process, the Land Registry will create a registered title for each individual  unit and one for the common parts.
    

2. Each unit holder, owns the freehold of their specified unit. There are no restrictions placed on the sale of an individual unit nor will in be subject to forfeiture, however, it will be subject to the rules and regulations of the common hold association and any purchaser will have to be aware of these as they will equally apply to them.
    

3. Outside of each individual unit, every part of the building will be deemed to be 'common parts'. This could include the roof, walls, the stairs, lifts etc and of course the land surrounding the property such as drives, walkways, parking spaces etc. The freehold of the common parts is owned by the common hold association.

A common hold may be created from scratch, as a new building or estate, or by the conversion of an existing building, already let on long leases or other tenancies.  There are two separate but similar procedures:-

• registration without unit-holders ( such in the case of a new build block of flats, where none of the units have been sold)

• registration with unit-holders.

In each case, an application to the Land Registry needs to be made to set up the common hold along with an application, form, a process fee and a set of four documents as listed below.

1. The Association documents: the full documentation relating to the established and registered association comprising the Memorandum & Articles of association and the certificate of incorporation, it's registration as a company at Companies House. It should be noted that, the  association must be in existence before any application to register the common hold can be made.  You cannot apply for a common hold stating that the association is in the process of being set up.
    

2. The Common hold Community Statement: this will be registered as part of the common hold title and must be submitted in it's final & completed  form, you are not able to submit a draft copy or alter it at a later date. If you do want to make alterations or amendments to this document, you will have to submit an official application to register an alteration

    

3. A statutory declaration- relating to any necessary consents from any persons with an interest in the land.
    

4. A certificate -by the Directors of the common hold association stating that;

• the overall application for registration satisfies statutory requirements;

• the Common hold Community Statement complies with statutory requirements;

• the Memorandum & Articles of association comply with current regulations;

• he common hold association has not traded and has not incurred any un-discharged liability.

As with all matters pertaining to the ownership of property or land, always seek good quality legal advice from a solicitor.