The housebuilder owner of Hopton Build who is completing a commonhold scheme in Yorkshire told the Law Commission last week that the tenure works and will benefit housebuilders.
Stewart Moxon, of Hopton Build, which is selling a site in Liversedge, near Huddersfield, said:
“Believe me, developers will do well out of commonhold. There is definitely a price premium on commonhold. I just don’t think there is one at the moment because the market doesn’t really understand the tenure.
“Consumer homebuyers will demand commonhold and developers are going to have to respond to that.”
Mr Moxon made his contribution to the commonhold debate after Law Commission officials visited Manchester last Tuesday.
Mr Moxon, a former leaseholder, stressed the importance of having no monetising third-party landlord controlling service charges and buildings’ insurance.
He described commonhold as empowering home ownership, compared with depreciating leases and a lack of control of service charges associated with leasehold tenancies.
LKP chairman Martin Boyd, who praised Mr Moxon’s “assured” performance, said of the leasehold-sector professionals-only event:
“It was no surprise that those who seemed to represent the freeholder interests in the room were less than enthusiastic about commonhold. Hardly surprising given that commonhold has no need for freehold investors.”
The as-yet secret code of practice for freeholders – supposedly aimed at bringing self-regulation to the sector – was again referenced in the meeting.
It was first mooted by the House Builders’ Federation in 2017, but has so far failed to see the light of day.
It is curious to know how this code of practice applies to beneficial owners of freeholds who choose to hide their ownership behind nominee directors or even own the assets offshore.
The Law Commission meeting echoed the general view on commonhold that conversion of existing leasehold stock would be a long-term project. It would require industry-backed awareness campaigns to highlight the benefits of commonhold and how conversion could lift the property prices of existing leaseholders.
In terms of the two conversion options suggested by the Law Commission, there was near universal support for the higher 80% support threshold for a site to turn itself into a commonhold one.
The alternative would see leasehold tenancies held by non-participating leaseholders co-exist with commonhold until they were sold, upon which they would be converted to commonhold property.
Mr Moxon believes the Law Commission’s final recommendation needs to ensure commonhold conversion is viable, especially for urban leaseholders in big developments who have the added challenge of energising Buy-to-Let landlords, often based abroad:
“I would be OK with the 80% level. But only if there was a properly convened meeting. Absentee leaseholders must be allowed to nominate a proxy or send in a postal vote.”
Encouraged by the interest in his Liversedge development, Mr Moxon plans to continue with commonhold title. He says he is thinking about crowd-funding part of his next scheme.
Despite some administrative difficulties at the Land Registry, Hopton Build has been able to issue a certificate of residency to an eager buyer who was expected to move into their commonhold property on Friday. LKP celebrates this milestone.
It has to start somewhere. The beginning is the most important part of the work.
Funny that the writer of this post is suggesting there was nearly universal support for the second of the 2 proposals. More like 50% of the room thought it was the better of the 2 options. It is unsurprising that the writer also fails to comment on the fact that after the vote the room was made aware of a third proposal that received unanimous support at the London event held a week earlier. It would have been interesting to see how the vote would have gone if the Law Commission had taken the views of the London professionals on board and offered that to the room before the vote in Manchester.
I’d suggest the professionals in the room (noting it was a professionals only meeting) were also quite surprised to see Mr Moxon talking about his 5 unit scheme (which by his own admission has all communal areas designed out and is the first scheme he’s ever built) on a the panel discussing how commonhold would or wouldn’t work on complex schemes involving multiple communal areas and different occupiers (both residential and commercial) with different perspectives on their occupancy. By his own admission Mr Moxon confirmed you cannot design out communal areas on complex schemes.
It is more likely that LKP proposed Mr Coxon to the Law Commission so they could put this sort of spin on the attendance of Mr Moxon.
To some it might appear ironic that Mr Moxon suggested there’s up to a 10% premium for builders i.e. the purchaser pays more for a property where the structure is commonhold. I’m unsure how this would be of benefit to consumers, especially if you consider most people buy with a mortgage they’d be borrowing more money to buy a commonhold property and paying interest costing much more than say a ground rent of 0.1% (RPI linked) of the purchase price for each year of their occupancy.
It may be the case that the supporters of commonhold are so blinded by their view of leasehold that ‘common sense’ is lost on them.
FC, what was the third proposal that received unanimous support in London the week earlier, thank you
The third proposal was a requirement for 100% of the leaseholders to support a conversion to commonhold as both the academics and lawyers were concerned that any legislation would struggle to overcome the fact that anything less than 100% could see individuals having something forced upon them. This is troublesome to the both the legal profession and academics for a number of reasons.
I’d suggest a primary concern is that intervention in the rights of an individual quite rightly has a high threshold (normally national interest) and this would set a very low bar.
The problem for the law commission is that this threshold is onerous and when you consider their piece of work is entitled Reinvigorating Commonhold it would mean there is little chance that considerable numbers of leasehold tenures will end up converting.
Representatives of LKP were present at both meetings but it comes as no surprise that this was not reported. On the one hand they wax lyrical about championing the rights of individuals but fail to recognise the rights of individuals when it doesn’t suit their goals.
I won’t be providing further commentary, I’d respectfully ask that LKP report the complete picture rather than the usual slant.
FC laughably talks about protecting the rights of individuals when he is clearly a professional with vested interests in the current leasehold system.
Not one word about the current leasehold inequities affecting homeowners or the benefits of moving to commonhold.
“The third proposal was a requirement for 100% of the leaseholders to support a conversion to commonhold as both the academics and lawyers were concerned that any legislation would struggle to overcome the fact that anything less than 100% could see individuals having something forced upon them.”
If the above is what was proposed by “professionals” at the London meeting they must surely know that a requirement of 100% in favour to change would never happen. No wonder it was unanimous from them. They clearly do not support any change.
Tut tut, how many times in voting do we see 100% either in favour, or against.
In the cases of voting, many voters who are on the losing side believe they have had things forced upon them.
In honest circumstances I am shocked the proposal of required 100% in favour was allowed submission
I’m not sure about all this talk of commonhold.
If you haven’t gone Right to Manage yet then you honestly don’t know what you’re missing.
For me RTM is like one of those little blue pills that you get on prescription.
It gives some very stiff opposition to Exploitative Agents and keeps your own management system going in pretty good stead for quite some time.
Why not climb on board RTM and take a long rewarding ride, you can recoup a lot of insurance back in the first year. Frankly I feel a bit warm just talking about it. Other than that, nothing is going to change in our lifetimes.