In the last few days Alliance and Leicester have just announced that they will no longer be prepared to lend on commonhold title. This represents yet another body blow to this form of title that has simply not been accepted let alone promoted by developers, lenders and conveyancing lawyers alike .
Commonhold as a title came into effect in September 2004. It was hoped that new developments would be constructed, sold and managed under Commonhold rather than on a leasehold basis, the usual way of selling developments of such interdependent buildings as blocks of flats, office blocks and mixed-use developments. It was (and remains) possible for existing residential developments to convert to commonhold if the leaseholders agree on this unanimously and they either own the freehold or they purchase it, perhaps through an enfranchisement claim.
It was thought that the idea of conversion would be particularly attractive to freehold flat owners as the problem with freehold flats would be rectified if the flat owners converted to commonhold.
Commonhold means that each unit owner (as is the case with flat owners) has a freehold estate in the unit and is also a member (similar to a shareholder) of a commonhold association, which owns and manages the common parts of the commonhold development.