Minister reveals bid to re-launch commonhold with help from new ‘industry council’

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The government has launched an initiative to re-ignite interest in Commonhold, the tenure introduced in 2002 by the then Labour government but which has failed to catch on.

Housing secretary Robert Jenrick (pictured) has announced a Commonhold Council which will be charged with reinvigorating interest in the tenure, which he says is a key plank in the government’s plans to give property owners ‘more control over their home and building’.

The announcement is one of the key recommendations into reforming property market made by The Law Commission last year.

Commonhold enables property owners, usually within apartment blocks, to take collective control of a building and take greater control of who manages it and the costs involved.

But the tenure has not taken off in the way many had hoped, largely because developers and freeholders find leasehold more lucrative via ground rents and other charges.

Also, commonhold doesn’t suit the many mixed-use developments that are being built these days and it hasn’t been supported by mortgage lenders.

To remedy this the Commonhold Council is to have representatives from many organisations within the property market.

This includes RICS, the British Property Federation, Building Societies Association, Federation of Private Residents’ Associations, Home Buying and Selling Group, Home Builders Federation, Law Society, campaigning Leasehold Knowledge Partnership and 12 others.

Rather oddly, though, no representatives from the property management sector are on the council.

“We are taking forward the biggest reforms to English property law for 40 years – and the widespread introduction of commonhold builds on our work to provide more security for millions of existing leaseholders across England, putting an end to rip-off charges and creating a fairer system,” says Jenrick.

Simon Law (pictured), Chairperson of the Society of Licenced Conveyancers, says: “We have long campaigned for reform of leasehold legislation and a move to widespread adoption of Commonhold in its place.
“It is greatly encouraging that the Government is now taking this seriously.”

Read more about the government’s plans.

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LEGAL latest: Landlord’s cavalier approach to deposit ends up in court

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A prospective tenant has been awarded his holding deposit back by a First Tier Tribunal after realising the landlord had demanded too much money.

Student Oluseyi Aina agreed to take a room at a house in Southbridge Road, Croydon, after seeing an advert on spareroom.com.

Landlord Janice Oliver requested £300 as a holding deposit, which he paid by bank transfer, but then found out this was not allowed because the rent was £500 per month and the maximum permitted payment was £115.38 – one week’s rent.

Aina asked for a refund but Oliver told him she would only return £100 and would keep £200 as admin fees. She added that the property had since been let out by her husband. After the conversation, he had sought advice from the Shelter helpline.

Oliver told the court that Aina had difficulty in raising the money for the rent and that she decided to let the property out for a fortnight to give him time to do this.

Daily rent charge

Oliver indicated that a daily rent would be charged which would be forfeited if he did not take up the tenancy.

She said he told her he no longer wanted the property and suggested that he had made the application because she was unwilling to return the full sum of £300.

However, the tribunal ruled that: “A landlord must not require a relevant person to make a prohibited payment to the landlord in connection with a tenancy of housing in England.”

It said the payment of £300 fell within the definition of a holding deposit and that as it represented more than one week’s rent, the excess over £115.38 was a prohibited payment. The landlord and tenant had also failed to enter into a tenancy agreement before the deadline for agreement.

Read more about holding deposits and the law.

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LATEST: Landlords waiting 37 weeks longer to evict tenants, official figures show

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Landlord repossessions took an average of nearly 58 weeks in the first quarter of the year, up from 21 weeks during the same period in 2020.

The Ministry of Justice’s mortgage and landlord possession statistics report for January to March has revealed the true impact of the evictions ban, showing how landlord possession claims (6,377), orders for possession (5,427), warrants (2,480) and repossessions (262) by county court bailiffs have dropped by 74%, 72%, 80% and 96% respectively.

While the government this week announced plans to wind down the ban, which will see bailiffs restart their work on 1st June, it’s expected that it could take many months before the courts return to normal.

According to a recent report by LSE London, the courts are set to buckle under the pressure once the eviction ban ends with delays unlikely to reduce.

A fall in volumes was seen across the country but applications were focused in London, where 1,965 landlord claims and 1,152 landlord orders were made at the capital’s courts during January to March, accounting for 31% and 21% of all claims and orders respectively.

Local variations

Landlord repossessions were highest in Exeter with 22 per 100,000 households, but were mainly concentrated in the South East, followed by London, the West Midlands and the South West.

Private landlords made up the largest proportion of landlord claims (44% or 2,833), in contrast to the same quarter in 2020, when they made up 24% of all claims.

The report says timeliness is volatile for landlord orders, warrants and repossessions due to low volumes being processed. But it adds:

“This should be taken in the context of extremely small volumes and the invariable additional time needed where normal courts procedures could not be followed.”

However, Landlord Action founder Paul Shamplina tells LandlordZONE that the courts were already struggling prior to Covid.

He believes cases will ramp up and predicts there will be 150,000 possession claims made in 2022.

Shamplina adds: “It’s been horrendous for those landlords who have accumulated rent arrears – we’ve never seen so many cases where landlords are owed more than a year’s rent with very little likelihood of getting it back.”

Pic credit: Channel 5/DCBL Ltd

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Portfolio Landlords: Now is the time to sell your properties for the best price

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House prices are predicted by many to fall following the end of the stamp duty holiday and tax bills are high. If you’re a portfolio landlord, now could be the perfect window to sell part or all of your buy-to-lets

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Lack of new properties to let putting pressure on prospective tenants

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A slowdown in the supply of new homes in April has seen price growth accelerate across the UK, according to the RICS Residential Market survey, April 2021. Meanwhile, a lack of new properties to let has also put pressure on prospective renters.

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