The UK property market is on the brink of a major transformation. With the government planning to replace leasehold with commonhold as the standard form of ownership for flats: buyers, owners, and developers are asking what this means in practice.
What is commonhold and leasehold?
Leasehold is the traditional way flats are owned in England and Wales. You have an exclusive right to occupy the flat for a set number of years (e.g. 125 or 999), but do not own the land or building it sits in. A third-party freeholder owns the building and land, and leaseholders often pay ground rent and service charges, with limited control over how the building is managed.
Commonhold, introduced by the Commonhold and Leasehold Reform Act 2002, is a modern alternative. It allows each flat owner to own their home outright, forever, while jointly owning and managing the shared parts of the building through a Commonhold Association.
How does Commonhold work?
A commonhold property is typically a block of flats or a housing estate where:
- Each unit/flat-holder owns the freehold of their home
- The shared areas (like the roof, hallways, and gardens) are owned and managed by a Commonhold Association.
- Every flat owner automatically becomes a member of this association.
The Commonhold Association is a limited company, registered at Companies House and the Land Registry. It sets out:
- The boundaries of each unit and the shared areas.
- The percentage each owner must contribute to maintenance and running costs.
- The duties of the Association, including:
- Insuring, repairing, and maintaining the building.
- Preparing annual budgets and cost estimates.
- Commissioning a reserve fund study every 10 years (and in the first year of setup).
The Association must hold annual meetings and can vote on decisions where there’s no clear consensus. All owners have a say, and the rules are standardised across all commonhold properties.
Commonhold works by dividing the property into:
- Individual units – owned outright by the residents.
- Common parts – owned and managed by the Commonhold Association.
Each owner:
- Has a freehold title to their flat.
- Is a member of the Commonhold Association.
- Pays a commonhold assessment (similar to a service charge) to cover shared costs.
How is this different from leasehold?
Here are the key differences:
- No time limit: Commonhold ownership is indefinite. Leasehold ownership decreases in value as the lease term shortens.
- No third-party landlords: In leasehold, the building is often owned by a profit-driven landlord. In commonhold, the owners manage it themselves.
- No ground rent: Commonhold owners don’t pay ground rent.
- No forfeiture: Commonhold units can’t be taken back by a landlord for breach of lease. However, rules still apply to things like subletting, alterations, and nuisance.
- Unified rules: All obligations are in one document, rather than separate leases.
- Transparent costs: Commonhold assessments are agreed by the owners and include reserve funds for long-term maintenance.
Who will commonhold affect?
Commonhold will be most relevant to:
- Buyers of new-build flats: Developers may start offering commonhold units instead of leasehold. If you’re considering buying one, our New Build team can help.
- Existing leaseholders: Converting to commonhold is possible but complex. If you require specific advice, please do get in touch.
- Freeholders: Commonhold removes the Freeholder’s role entirely.
In practice, the closest equivalent to commonhold commonly seen is a leasehold flat with a 999-year lease, peppercorn ground rent, and a freehold owned by a company owned and controlled by the leaseholders.
When will commonhold come into effect?
The government is looking to make commonhold the standard form of ownership for flats in England and Wales. A draft Leasehold and Commonhold Reform Bill is expected in the second half of 2025, following the publication of a Commonhold White Paper earlier this year.
However, there is no confirmed date for when commonhold will become mandatory. The transition is expected to begin with new-build developments, with further legislation and consultation needed before existing leasehold properties can convert. So, while change is coming, it may take time to fully roll out.
Need advice?
Whether you’re buying a new flat, managing a leasehold property, or developing a new site, our team can guide you through the implications of commonhold. Get in touch today to learn more.
