Leasehold property sales could soon be scrapped in favour of commonhold, in accordance with recommendations made in The Law Commission’s ‘Residential leasehold and commonhold’ report in July 2020, after the government announced today that it is to establish a commonhold Council. The new council will be a partnership of leasehold groups, industry and government that will prepare homeowners and the market for the widespread take-up of commonhold. The commonhold model is widely used around the world and allows homeowners to own their property on a freehold basis, giving them greater control over the costs of home ownership. Blocks are jointly owned and managed, meaning when someone buys a flat or a house, it is truly theirs and any decisions about its future are theirs too. The creation of the Commonhold Council should help to reinvigorate commonhold, ensuring homeowners will be able to call their homes their own.

The government says that it will bring forward a response to the remaining Law Commission recommendations, including commonhold, in due course. Instead of a freeholder owning the land, flats would be commonhold which gives the owners of homes in shared buildings more autonomy and broader rights. The only legitimate income stream from the whole leasehold game is ground rents. Once you strip that out the whole business of ground rents comes to an end. Therefore, most commentators believe housebuilders will be quite amenable to commonhold.

Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This newsletter is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of January 2021 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.