Value Added Tax

Commonhold interests

Produced by Tolley
  • 23 Mar 2022 10:33

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Commonhold interests
  • What is a commonhold interest
  • Who can have a commonhold interest?
  • Commonhold arrangements
  • VAT treatment of creating a commonhold
  • A developer constructs a new building and sets up a commonhold
  • A number of freeholds are converted into a single commonhold
  • A leasehold is converted into commonhold
  • Sales of a commonhold interest
  • Sale of a commonhold unit by a unit holder
  • More...

Commonhold interests

Until the Commonhold and Leasehold Reform Act 2002, English law only recognised two forms of property ownership:

  1. freehold – which confers upon the party absolute title in a property

  2. leasehold – which confers upon the party holding the lease of a property of an interest in that land and property for a fixed number of years

From 2002 a new form of property interest was introduced called a commonhold interest in land and property.

What is a commonhold interest

Commonhold is a way of owning property in a multi-occupancy property and offers an alternative to the leasehold system. It allows for multi-occupancy buildings to be divided into units and common parts to be in the form of freehold ownership rather than leasehold. The freehold interest in the communal areas and its structure are usually owned by a commonhold association that is comprised of the owners of the units. It is designed to overcome some of the disadvantages of having a leasehold interest in a property. Commonhold can be applied to residential and commercial buildings however in practice it is more likely to be used in residential developments. In residential properties this will mean that each flat owner will own a freehold rather than a leasehold interest.

Who can have a commonhold interest?

Commonhold is available for residential, commercial or mixed use developments. Parties owning the interest in individual units under commonhold are referred to as 'unit-holders'.

Commonhold arrangements

A commonhold may only be registered when all those with an interest in the property have agreed

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

There's no margin for error. Think Tax.
Think Tolley.

TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.


Popular Articles

Trading losses carried forward

The reform of corporate losses within Finance (No 2) Act 2017 included a mixture of relaxations to the use of losses within the previous regime which applied before 1 April 2017 and also a major restriction (50% for most companies) on the amount of profits after 1 April 2017 that can be covered by

16 May 2022 13:23 | Produced by Tolley Read more Read more

Pre-owned assets tax

Where a donor has made a gift of property and continues to use or benefit (or may benefit) from that property in some way, he may have made a gift with reservation of benefit for the purposes of inheritance tax (IHT).However, this will not be the case where:•a donor makes a gift of cash and the

23 Mar 2022 10:59 | Produced by Tolley Read more Read more

Qualifying loan interest

Interest paid on qualifying loans is deducted from the taxpayer’s total income (ie a Step 2 deduction from total income). See the Proforma income tax calculation guidance note.Interest on qualifying loans is usually paid gross by the individual borrower; tax is not withheld at source. This includes

22 Mar 2022 09:49 | Produced by Tolley Read more Read more