If government wants commonhold to succeed at scale it must invest in training

If not, the consumer will pay the price

Commonhold is back in the spotlight: the Draft Commonhold and Leasehold Reform Bill has confirmed the government’s commitment to reform leasehold and the consultation announce on 28 January is a chance to get the detail right.

As a member of ALEP, I support reform of leasehold because the status quo has, in some circumstances, left homeowners exposed to unfair costs and poor outcomes.

But I also think we should be honest about the scale of the change now being proposed. Commonhold may become the default tenure for new flats, but a tenure is only as strong as the people who advise on it manage it sell it and lend against it.

Training is the missing piece

Most commentary treats commonhold as a policy choice: better or worse than leasehold. In practice it is an operating model distinctly different from that which is currently in place.

Commonhold requires new documents, new decision-making processes, new management behaviours and new advice patterns. Getting those right is important in determining whether buyers feel confident, whether lenders remain comfortable and whether disputes are resolved quickly.

ALEP’s Commonhold Policy Statement should stop us in our tracks: the fact is that there are no more than around 20 commonhold developments in England and Wales. That means very few professionals have hands-on experience.

If we mandate a tenure most practitioners have never encountered, we should not be surprised if the early years are messy. More importantly we should not pretend that the costs of that mess will be absorbed by the system.

They will land with consumers through higher fees slower transactions increased risk premiums and avoidable disputes.

Who needs to be ready?

The profession needs solicitors, valuers and conveyancers with confidence in the commonhold framework and in the practical use of the Commonhold Community Statement and related company documents. They will also need to answer lender enquiries consistently because uncertainty is what stalls mortgage decisions.

Managing agents need a clear grasp of how budgets contributions governance and enforcement work in a commonhold context and how that differs from a lease-based service charge regime. That matters because commonhold is sold as control and transparency. If the day-to-day administration is weak owners will lose faith quickly.

Estate agents and sales teams are often overlooked but they are the first interpreters of tenure for the public. If they cannot explain commonhold plainly the market will respond in the way it always does when faced with complexity: by discounting.

Valuers, lenders, insurers and tribunal users also need to move in step. A tenure that is legally sound but operationally unfamiliar will not gain traction without common standards and common language across these groups.

The cost of a skills gap

There is a persistent claim that commonhold will be cheaper to transact than leasehold. It may be overtime, but ALEP has cautioned against promising immediate savings.

In the early years, a buyer’s solicitor is likely to carry a heavier advice burden because they must review the Commonhold Community Statement and company information as well as management accounts and disclosures then deal with lender requirements that may still be evolving.

If the market lacks trained professionals three predictable consequences follow.

• First, transactions slow down. That creates chains collapsing and increased fall through rates. When sales do complete the professional time spent will not be free and the consumer pays.
• Second, inconsistency breeds dispute. If different advisers interpret the same structures differently you get more challenges over contributions responsibilities repairs and enforcement. That feeds tribunal pressure and drives management costs up.
• Third, risk is priced in. Lenders may tighten criteria on converted schemes or require more due diligence until a track record emerges. That can restrict consumer choice and again the costs filter through the system.

None of this is an argument against commonhold. It is an argument against pretending that legislation alone is necessary to bring about its implementation.

Phasing is not delay – it is protection

ALEP’s position has been consistent: reform is necessary, but it must be workable evidence based and developed with the professionals who will operate it.

The Leasehold and Freehold Reform Act (LAFRA) began a long overdue process, but its partial implementation is also a reminder that headline change can outpace the machinery needed to deliver clarity on day one.

Commonhold for new developments should be more straightforward than converting existing leasehold properties to commonhold. This is because in mixed use blocks shared ownership, non-participating leaseholders, historic disputes, fragmented interests and lender requirements frequently fail to align.

ALEP has therefore argued for a phased and pragmatic start so the market can test the model on real schemes refine standard documents and build capacity before any wider conversion programme gathers momentum.

This approach also supports housing delivery. Developers need a tenure that can be explained, funded and operated reliably.

If implementation runs ahead of market readiness, we risk adding friction at the very moment government is trying to accelerate supply.

What structured training should look like

ALEP has estimated that introducing commonhold at scale would require several days of structured training per practitioner amounting to many hundreds of hours across the profession.

This is also where professional bodies can be practical partners to government. ALEP comprises specialist solicitors, valuers and managing agents who already deal with complex corporate structures resident management companies variations service charge regimes and specialist valuations. That expertise translates well to commonhold, and it can help build confidence across the wider market.

For those who want to begin that journey now, ALEP is already running training that covers both commonhold and the adjacent areas practitioners deal with every day.

Details can be found on the ALEP website.

A balanced route forward

Leasehold reform should continue and it should be done with care. Commonhold can be workable, but success will rest on whether the market is prepared.

If ministers want consumers to benefit from better ownership structures, they should treat training as part of the infrastructure of reform. Fund it, plan it, phase it and measure it.

Otherwise, we will create a new kind of unfairness: not one rooted in tenure itself but in a shortage of people qualified to help homeowners navigate it.

Mark Wilson – Director, Myleasehold and a member of ALEP (Association of Leasehold Enfranchisement Practitioners)