Commonhold explained: could your block own itself outright?

In most countries where people buy flats, they own them outright. In England and Wales, most flat owners are leaseholders: they hold their home for a fixed term, typically 99 or 125 years when the lease was granted, counting down with each passing year. They pay ground rent to a freeholder who owns the building around them. They need consent for alterations. Their home diminishes in value as the term shortens.

Commonhold is the alternative: flat owners own their units freehold, the common parts are owned and managed collectively, and there is no freeholder to whom anyone owes ground rent or deference. It is already lawful in England and Wales. It has been since 2002. And yet — because of a combination of inertia, lender caution, and structural problems with the original legislation — commonhold is barely used. There are estimated to be fewer than 20 commonhold properties in the whole of England and Wales.

The government is now trying to change this. A Commonhold White Paper was published on 3 March 2025. A draft Commonhold and Leasehold Reform Bill followed on 27 January 2026. It is undergoing pre-legislative scrutiny. The direction is clear. The timelines are not.

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What commonhold actually is

The ownership structure

In a commonhold scheme, each flat owner holds their unit as a freehold. The title does not expire. There is no landlord to whom the owner owes ground rent or must apply for consent. The flat is theirs in the same way a house owner's house is theirs.

The common parts of the building — the entrance hall, stairwells, roof, external walls, gardens, lift — are owned collectively by a commonhold association. Every unit owner is automatically a member of the commonhold association. The association is a company limited by guarantee, registered at Companies House, with a constitution (the commonhold community statement) that governs how the common parts are managed and how unit owners contribute to their upkeep.

There is no freeholder standing above the scheme. No one is extracting ground rent. No lease is ticking down. The building, in a meaningful sense, owns itself.

How costs are shared

The commonhold community statement sets out each unit owner's share of the commonhold assessment — the equivalent of service charges. These contributions fund the maintenance and insurance of the common parts. There is also a reserve fund equivalent. The principles are similar to service charges under a leasehold scheme, but the legal relationship is different: unit owners are members of the association that manages the building, not tenants of a landlord who collects charges.

Governance

The commonhold association is run by its members — the unit owners — typically through elected directors. Decision-making follows the company's articles and the commonhold community statement. Major decisions (such as changing the allocation of commonhold assessments) may require a majority or supermajority of unit owners.

In broad governance terms, commonhold is not unlike what a well-functioning RTM company does after it takes over management — a group of resident owners collectively responsible for their building. The critical difference is the underlying ownership structure: in commonhold, that collective ownership is built in from the start, not acquired through a statutory process over the head of a freeholder who remains in the picture.

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Why commonhold barely exists in England and Wales

The Commonhold and Leasehold Reform Act 2002 introduced commonhold, but the take-up was almost zero. Several factors explain this:

Lender caution. For much of the post-2002 period, many mortgage lenders were reluctant to lend on commonhold properties because the legal framework was unfamiliar and there was little established precedent for how things worked when a unit owner defaulted or the commonhold association became dysfunctional. Without mortgage finance, commonhold was impractical for most buyers.

Developer inertia. Developers continued building new blocks as leasehold — partly because leasehold generates ongoing income from ground rents, and partly because converting to commonhold required legal expertise most developers and their solicitors didn't have. The path of least resistance was to carry on doing what had always been done.

Legal complexity of conversion. Converting an existing leasehold block to commonhold under the 2002 framework required the unanimous agreement of all leaseholders — a threshold that was, in practice, almost always impossible to reach.

Problems with the 2002 framework itself. The original legislation had technical flaws that made it difficult to operate in practice, including issues around how existing mortgages interacted with the scheme and how the association could deal with defaulting unit owners.

The result is that commonhold exists on the statute book but not in the housing stock.

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The Commonhold White Paper and the draft Bill

The White Paper (3 March 2025)

The government's Commonhold White Paper, published on 3 March 2025, set out plans to reinvigorate commonhold as a tenure. The central proposals were:

• To make commonhold the default tenure for new flats, replacing leasehold as the standard form of flat ownership going forward.
• To ban new leasehold flats — so that once the new regime is in force, developers could no longer create new leasehold flat schemes.
• To reform the legal framework for commonhold to address the technical problems that hampered the 2002 version.
• To make it possible for existing leaseholders to convert to commonhold, though the White Paper acknowledged that conversion would be complex and would need careful design.

The draft Commonhold and Leasehold Reform Bill (27 January 2026)

The draft Bill was published on 27 January 2026. It is undergoing pre-legislative scrutiny — a parliamentary process in which a select committee (or joint committee) examines the draft before it is formally introduced to Parliament. Pre-legislative scrutiny typically leads to further amendments before the Bill is introduced, and there is then the full parliamentary passage before anything becomes law.

The draft Bill aims to implement the White Paper's direction: reinvigorating commonhold, strengthening leaseholders' rights more broadly, and reforming aspects of the economic and enforcement features of long leases. The specific provisions will be subject to parliamentary debate and potential amendment.

The honest framing: the draft Bill is a significant step but it is not law. The timelines to Royal Assent, commencement, and the point at which developers are actually required to use commonhold rather than leasehold are not yet known. Leasehold reform in England has a history of proposals that take longer to translate into practice than initially anticipated. This is a direction, not an arrival.

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What commonhold would mean for existing leaseholders

The aspiration

If the conversion pathway is workable, existing leasehold blocks would have the option — subject to meeting whatever thresholds the legislation sets — to convert to commonhold. The benefit would be permanent: no expiring lease, no ground rent, no freeholder with potentially conflicting interests.

The complexity

Conversion from leasehold to commonhold is genuinely complex. Among other things:

• All existing leases and mortgages on the flats would need to be handled, since they would be replaced by freehold commonhold titles.
• The mortgage lenders on every flat in the building would need to agree to the conversion (their security changes form).
• The freeholder's interest would be extinguished — which means paying for it, or having it compulsorily acquired at a price, unless the freeholder is a willing party.
• The legal and administrative costs of conversion for a single block could be substantial.

How the draft Bill ultimately handles these practical issues — the thresholds for conversion, the treatment of mortgages, the valuation of the freeholder's interest — will determine whether conversion is realistically available to most existing leaseholders or remains theoretical.

Timelines

Uncertain. Pre-legislative scrutiny, formal parliamentary introduction, parliamentary passage, Royal Assent, commencement regulations: each step takes time. The most optimistic reading would see the core provisions in force in the late 2020s. A more cautious reading puts meaningful commonhold conversion for existing blocks well into the 2030s, if the political will remains.

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How commonhold differs from RTM and enfranchisement

It is worth being precise about the distinctions, because all three involve residents having more control over their building.

RTM gives you management control. The freeholder keeps the freehold. The leases continue. The fundamental tenure of each flat is unchanged — still leasehold, still ticking down, still owned by a distant freeholder. RTM is a management solution, not a tenure solution.

Collective enfranchisement buys the freehold. The group of leaseholders becomes the freeholder. But the flats remain leasehold — each resident still holds a lease, now from the residents' own company rather than an external freeholder. The flats do not become freehold. Ground rent is still collected (from the freehold company to itself, in effect). The leases still expire and still need extending.

Commonhold changes the tenure entirely. There are no leases. There is no freeholder. There is no ground rent. There is no expiry date. Each flat is owned freehold, and the common parts are owned collectively. Commonhold is a more fundamental structural change than either RTM or enfranchisement — and correspondingly more complex to implement, especially for existing buildings.

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FAQ

Can I convert my leasehold flat to commonhold right now? Not easily — and in practice, almost no one has done so. The 2002 framework requires unanimous agreement among leaseholders, among other obstacles. The draft Bill published in January 2026 is intended to create a workable conversion pathway, but it is not yet law.

Will new-build flats be commonhold once the Bill passes? If the Bill is enacted with its current intention, yes — new leasehold flat schemes would be banned and commonhold would become the default. But the Bill is not yet law, is subject to parliamentary scrutiny and amendment, and the commencement date is unknown.

Is commonhold better than RTM? They solve different problems. RTM is available now and gives you management control. Commonhold changes the underlying tenure of your flat. For most people with a current problem — a bad managing agent, unresponsive freeholder, escalating charges — RTM is the practical near-term solution. Commonhold is the long-term direction for the tenure system as a whole.

What is a commonhold community statement? It is the governing document of a commonhold scheme — roughly equivalent to a combination of the lease terms and the management agreement in a leasehold block. It sets out the rights and obligations of each unit owner, the rules for common parts, and how the commonhold assessment is allocated. It is registered at HM Land Registry and is binding on all owners and successors in title.

Does commonhold eliminate the need for a management structure? No. The common parts still need to be maintained, insured, and managed. The commonhold association takes on that role — the governance functions are similar to an RTM company, just built into the ownership structure from the outset rather than grafted on through a statutory process. Good systems, clear records, and competent directors remain as important in commonhold as in any other model.