Commonhold isn’t a new idea; similar systems have been operating in the United States, Australia, Scotland, Germany, Italy and France for many years. It was originally introduced to England and Wales via the Commonhold and Leasehold Reform Act 2002 but failed to become established, partly due to a lack of flexibility in the legislation around mixed-use developments and shared ownership.
The UK Government’s Commonhold White Paper, published in March 2025, draws on the findings of a comprehensive Law Society review and lays out Ministers’ thinking on how to reinvigorate commonhold as the preferred alternative to leasehold.
What is commonhold?
Commonhold is a form of property ownership designed for flats and other interdependent buildings, providing a framework for the effective management and upkeep of buildings without a third-party landlord. It allows individual properties within a building or larger development to be owned on a freehold basis.
Individual property owners each own their unit outright with no expiring term and share ownership of communal areas through a commonhold association, a limited company they are all members of and jointly control. The commonhold association owns and manages the shared parts of the building and seeks input from all unit owners on how to manage these.
In England, the commonhold association will also be the Principal Accountable Person under the Building Safety Act 2022 and be legally responsible for ensuring fire and structural safety is properly managed in the building.
The Commonhold Community Statement (CCS)
The CCS acts as the commonhold’s rule book and outlines how shared areas, structures, and facilities will be managed, maintained, and funded. Most of that CCS will be specified in law, so the rules governing the operation of a commonhold will be broadly similar wherever that block is located, making it simpler for homeowners (and their conveyancers when buying and selling commonholds) to understand the obligations when moving from one flat to another, and allowing for standard guidance to be provided to all commonhold unit owners.
Commonholds can supplement the CCS with their own local rules, which apply only to that block or development, for example, whether owners will be allowed to keep pets or how shared spaces can be used.
The role of agents in commonhold
In a statement to parliament in November 2024, Housing Minister Matthew Pennycook, MP, was clear that managing agents play a key role in multi-occupancy buildings and freehold estates, and their importance will only increase as part of the transition toward commonhold.
Under the proposed model, agents can be employed by commonhold associations to assist in the day-to-day management of a building, and it is anticipated that almost all new commonhold developments, especially larger or more complex buildings, will be established with a managing agent to help run the site on their behalf. Ministers are giving further consideration to whether there are some situations or building types, such as high-risk buildings, where it should be mandatory for a managing agent with appropriate expertise to be employed.
Regulation of managing agents
The UK Government has committed to the greater regulation of managing agents in England, which it has stated will include mandatory professional qualifications. The White Paper confirms that a consultation on regulation will be opened later in 2025, based on the recommendations of the Regulation of Property Agents (RoPA) Working Group.
Converting from leasehold to freehold
The 2002 Act allowed leaseholders to acquire their freehold and then convert to commonhold. The current law requires consent from everyone with a significant interest in the property, including the freeholder and all the leaseholders and their mortgage lenders, which in practice is almost impossible to achieve, especially in larger buildings.
The White Paper sets out the UK Government’s intention to reform this process, including reducing the consent threshold to 50%, to make conversion easier and more accessible. However, this will have implications for leaseholders who do not want to, or cannot afford to, take part in a conversion, and raises the question of how a commonhold association would work effectively with non-consenting leaseholders.
Proposals for how conversion will work in the future are being developed, and these will be set out in the draft Leasehold and Commonhold Reform Bill, which is set to be published later in 2025.
Impact on home buying and selling
These changes aim to provide greater transparency, security, and control for consumers, which the UK Government anticipates will make property transactions more straightforward.
Critically for lenders, the value of a commonhold unit will not be reduced year on year throughout a mortgage because the lease is running down. This should provide lenders with increased confidence to lend.
However, the mortgage market will need to develop as commonhold grows and, as it may take several years for reforms to existing leasehold flats to come into effect, it is still vital to improve the situation for leaseholders who want to move home in the meantime.
Accommodating shared ownership
Under the terms of the 2002 Act, shared ownership units could not exist in commonhold because they require a lease and lease-based financing. The new legislation will permit shared ownership leases that contain fundamental clauses prescribed by Homes England or the Welsh Government.
By making this exception, the UK Government hopes that commonhold will appeal to a more diverse range of buyers and make it more attractive and simpler for developers to secure planning permission, which often requires shared ownership units as part of affordable housing requirements.
Adaptations for commercial properties
Separate sections and separate heads of costs are vital new concepts for commonhold, as they will enable mixed-use developments where commercial unit owners will have the same rights as residential flat owners.
Importantly, if a floor of retail or office units does not use the same facilities as the flats above them, they can be designated as a separate section. This means that commercial unit owners will only vote on matters solely affecting their section and will only be responsible for paying towards services or upgrades that benefit them.
The new commonhold model will also allow developers and the commonhold associations to allocate certain costs and decision-making power over those costs according to who uses certain services. If a group of retail units uses a loading bay, they will be responsible for paying for its upkeep, and those whose units do not have access will not be expected to contribute.
