Co-op Party welcomes Labour’s commonhold proposals

A policy report suggests measures to strengthen leaseholders’ rights, introducing proposals for a new commonhold tenure

The Co-operative Party has given its backing to commonhold proposals put forward by its sister party Labour.

First introduced under a reform act in 2002, commonhold gives residents full ownership of their flat, equal to a freehold house, and shared ownership of and responsibility for common areas and services. The model is commonly used in Europe, as well as Australia and the USA.

While commonhold has been an option not a requirement for new developments, Labour intends to make it mandatory. This month it put out a report, Ending the scandal – Labour’s new deal for leaseholders, which contains a series of measures to further strengthen leaseholders’ rights, introducing proposals for a new commonhold tenure.

These include ending the sale of new private leasehold houses with direct effect, and the sale of private leasehold flats by the end of its first term in government.

It would also end ground rents for new leasehold homes, and cap ground rents for existing leaseholders at 0.1% of the property value, up to a maximum of £250 a year. Furthermore, Labour pledges to set a simple formula for leaseholders to buy the freehold to their home, or commonhold in the case of a flat, capped at 1% of the property value.

An incoming Labour government would also crack down on unfair fees and contract terms by publishing a reference list of reasonable charges, requiring transparency on service charges, and giving leaseholders a right to challenge rip-off fees and conditions or poor performance from service companies.

Residents would also get greater powers over the management of their homes, with new rights for flatowners to form residents associations and by simplifying the Right to Manage.

The number of leasehold properties is continuing to rise, and has passed the 4 million mark. By contrast, commonhold can be found in fewer than 50 blocks across England and Wales.

In 2017, the Co-op Party agreed at its annual conference that it should be easier for existing leaseholders to convert their ownership to commonhold through strengthening the legislation as part of the wider leasehold reform.

Co-op Party policy officer Anna Birley said: “Commonhold offers a fairer system for homeowners. It gets rid of outside landlords, ends expensive ground rents or hidden charges, prevents your freehold being bought and sold, and gets rid of the concept of a ‘declining asset’ – meaning the worry about how many years are left on the lease is no longer a concern.

“Importantly, on top of this commonhold gives homeowners a say and a stake in how their properties are run. In a block of flats, for example, it’s the owners of those flats who can make decisions on the communal garden or roof repairs, not an external company who owns the freehold. It’s a form of democratic, community ownership that makes flat ownership more equitable.”