On 3rd March 2025, the Government published a white paper proposing to ban the sale of all new leasehold flats in England and Wales and the enforcement of a commonhold ownership structure, but what does this mean for home owners?
When it comes to property ownership in England and Wales, you’ve probably heard the terms “freehold” and “leasehold.” However, a less common but increasingly significant form of ownership is commonhold. Introduced by the Commonhold and Leasehold Reform Act 2002, commonhold ownership offers an alternative for managing and owning multi-occupancy buildings or developments. It was trialled in 2004 before being abandoned, but the labour Government is keen to right the wrongs of the past and push forward with a re-invigorated and redesigned Commonhold tenure.
What is commonhold ownership?
Let’s be clear, commonhold ownership is a type of freehold. It allows individuals to own their flat or unit outright, while simultaneously sharing ownership and responsibility for the building’s communal areas—such as stairways, hallways, and gardens. Unlike leasehold, where properties are owned for a limited time under a lease agreement with a landlord (freeholder), Commonhold gives outright ownership of the unit forever—no expiring leases, no ground rent.
This model works particularly well for developments like apartment blocks or mixed-use buildings. It provides clarity, consistency, and more control for property owners.
How does it work?
The structure of a commonhold development typically includes:
- Unit owners: Each flat or unit owner holds the freehold of their property outright.
- Commonhold association: A management company, typically made up of the unit owners, is responsible for maintaining communal areas. This association operates under a legal framework called the commonhold community statement, which sets out rules and obligations for all owners. Unlike leasehold, this is a single document which Governs the whole development rather than the current system where each leasehold can have a different lease and set of obligations.
Owners have a say in how their building is managed, fostering a cooperative approach to property upkeep and decision-making. It is a popular and successful form of ownership in many other countries, including Australia, Canada, Denmark. France, Germany, Italy, New Zealand, and USA.
Benefits of commonhold ownership
- No lease expiry: Unlike leasehold properties, where leases can expire or require costly extensions, commonhold grants indefinite ownership.
- Greater control: Owners collectively make decisions about their property rather than relying on external 3rd party freeholders.
- Transparency: Clear legal frameworks reduce disputes, with all costs and obligations outlined in the commonhold community statement.
- Eliminating ground rent: Since there’s no freeholder, unit owners don’t pay ground rent—a contentious issue with leasehold arrangements.
- No risk of forfeiture: As the property is owned outright there is no risk that the commonhold can be forefeited in the same way that a lease can be.
Challenges and current adoption
Despite its advantages, commonhold hasn’t gained widespread adoption in the UK. Reasons include:
- Resistance from developers: Leasehold arrangements can be more profitable for developers, making them less incentivised to offer commonhold properties. The Government hopes to legislate to enforce the adoption of commonhold on new properties.
- Awareness and tradition: Leasehold has been the status quo for centuries, and commonhold is still relatively new and less understood.
- Legislation and transition barriers: Converting existing leasehold buildings to commonhold can be complex, requiring consensus from multiple stakeholders.
However, as the UK Government takes steps to reform leasehold law, commonhold may well rise in prominence. Legislative efforts aim to simplify the process, making this ownership model more appealing to buyers and developers alike.
A modern solution for a traditional market
Commonhold ownership represents a modern, equitable approach to property management and ownership in the UK. By empowering individuals with full ownership and shared responsibility, it offers a potential solution to many of the pitfalls associated with leasehold. While its adoption may still be limited, the future holds promise for this innovative system.
Whether you’re considering purchasing a property or simply curious about alternatives to leasehold, commonhold is worth keeping an eye on—especially as the UK’s property market evolves.
How can we help?
Chris Huntingford is a Partner at Nelsons and heads our expert Residential Conveyancing team. Chris advises on a wide range of matters, including house sales and purchases, auction property purchases, remortgages, transfers of equity and right-to-buy purchases.
For further information regarding the subject discussed in this article, please contact one of our conveyancing solicitors in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online form.
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