Commonhold: common purpose for property

A new protocol for property ownership and management arrived earlier this week. David Lammy explains what commonhold offers

Commonhold is a new way of owning freehold property. It is suitable for premises such as flats and offices. Until now, these kinds of premises needed a lease to create proper arrangements for their repair and maintenance. In commonhold, instead of a lease for each flat or office, there will be a single commonhold community statement (CCS) for the whole development.

The commonhold community statement is a creation of Part I of the Commonhold and Leasehold Reform Act 2002 and the Commonhold Regulations 2004. Every commonhold must have one.

In preparing the model CCS set out in the regulations, the Department for Constitutional Affairs (DCS) consulted widely and was greatly assisted by the many experts and stakeholders. Of course the model does not contain everything that everyone wanted, but it is the fruit of genuine consultation and we will monitor its performance.

The CCS is intended to be the day-to-day governing document of the commonhold community. It defines the rights and duties of the unit-holders and the commonhold association and the procedures by which disputes can be settled.

Although the CCS is subject to the legislation and the memorandum and articles of the commonhold association, it is, in effect, the community’s constitution. It is intended to be accessible to and readily understandable by actual and prospective members.

Each CCS must follow the form and content of the model statement set out in the regulations. Form and content will be largely standardised and the task of drafting the document will, to that extent, be simplified. However, the draftsman’s skills will not be redundant.

In drafting a CCS the primary task will be to tailor the model to the circumstances of the individual commonhold by the addition of local rules. These will define the character of the individual commonhold.

There are two kinds of local rules. The first describes the basic details of the commonhold. The commonhold land must be defined. The commonhold association must be identified and the property rights of the unit-holders spelt out. Allocations of voting rights and percentages of common expenditure must be specified.

The second kind of local rules are genuinely voluntary. They are the rules for living in the community.

Whether there should be few or many local rules of this kind in a CCS will vary, but the task of identifying and creating the appropriate rules will be little different from the process of drafting leases and transfers. However, it is to be hoped that the opportunity will be taken to review time-honoured precedents and use clear modern language to match that used in the rest of the CCS.

The diversity of local rules will of course, cut across the objective of making commonhold documentation uniform and instantly recognisable. Local rules will therefore have to be clearly identified.

I hope that in these ways we have struck an appropriate balance between flexibility and uniformity. The DCA will be publishing general guidance on the preparation of commonhold community statements including some specimen clauses prepared by experts and stakeholders.

On 27 September commonhold moved from the drawing board into the real world. The challenge of creating satisfactory commonhold documentation moves from government to the professions, in particular, to solicitors.