NOTB: One of the criticisms is that developers have little incentive to build commonhold. What are your plans to change this and to encourage developers to embrace commonhold?

VB: Developers and lenders do need to understand the advantages of commonhold. It’s intended to be easier to administer, it’s intended to engender a better sense of community and to standardise documents. I don’t think we have got those messages across. The consultation document will consider whether there is a need to be more flexible to make the legislation more accessible. And it will also give an opportunity to engage with developers to see why it hasn’t been taken up and to get a good dialogue going so we can hopefully move it forward.

NOTB: Developers have said they will lose revenue from ground rent under commonhold as well as the redevelopment rights.

VB: Yes, they would keep an income stream if they worked on leasehold. The question from buyers is whether commonhold would be better than leasehold, and they probably would say ‘yes’ because they would no longer be sitting on a wasting asset.

NOTB: A commonhold flat should be worth more than a leasehold flat but the trick is to demonstrate that to the market, and with so few commonhold developments there needs to be a kick start. Would you agree?

VB: The consultation paper may do that, may kick start the process, and this is how we are going to proceed – to try and engage with developers. We are behind commonhold and we do want it
to succeed.

NOTB: Do you think we will see commonhold in our lifetime?

VB: Yes, I hope we will see it in our lifetime and that it will be a runaway success. But how fast it runs I don’t know. We are going to do our best to promote it.

NOTB: Another issue with the current legislation is the 100% threshold required to convert existing buildings to commonhold. Do you think this will
be reduced?

VB: That point needs to go into the consultation, but I do think you need 100%. If somebody in multiple occupancy doesn’t want to do it, are you going to force him or her into it? I don’t think so. If you are not going to force them into it (and it is intended to be voluntary) then if you lower the threshold you will end up with a mixture of commonhold and leasehold and that would be very difficult to manage. At the moment my best guess is that the 100% threshold probably won’t change and we need to encourage voluntary uptake. This point also will go into the consultation.

NOTB: We understand from our readers that if they want to take control of their block they would prefer to go through leasehold enfranchisement where the conversion threshold is lower and it’s easier for them to get share of freehold. And once they have obtained share of freehold there seems to be little incentive for them to go for the 100% conversion for commonhold. So, if blocks always convert to share of freehold then it’s going to be even harder to get them to convert to commonhold afterwards

VB: That is probably the biggest challenge in getting commonhold off the ground. I don’t think it’s impossible but we certainly have to try and engage with people at the front line much more powerfully.

NOTB: Would the government consider taking a lead with commonhold, for example, by making all new social housing or key worker developments commonhold?

VB: I don’t think so because it should be voluntary and should be readily taken on.

NOTB: What are your views on a ‘sunset clause’ after which time all flats built will be commonhold developments?

VB: One doesn’t want to be forcing people. Again this is probably something to go into the consultation. We are very anxious that we get in touch with the people who are involved with this to say, ‘look, this is a good thing. What’s holding you back from embracing it?’

NOTB: Will commonhold replace leasehold or do you see the two existing side by side?

VB: I think the point is to have a great range of tenures and to provide a range of choice. I don’t think we will close anything down.

Vera Baird’s biography

Education

Commonhold