Commonhold – what is it, and what is its future?

What is commonhold?

Commonhold is a form of property ownership which allows units within a building or larger development to be owned on a freehold basis.

Unit owners or ‘commonholders’ own the freehold of their unit. The freehold in all common parts – being parts such as the structure of a building, hallways, and gardens – is owned by a commonhold association, and each commonholder is entitled to be a member. A commonhold community statement acts as the commonhold’s ‘rule book’, providing a governing framework for the commonhold association and dealing with items such as how common parts will be managed and funded, as well as setting out obligations to which commonholders agree to be subject. Commonholders pay commonhold contributions – much like service charges under the leasehold system – towards the running costs of their commonhold.

What has held commonhold back in the UK?

Commonhold in the UK is nothing new; the legal framework for commonhold was established in the Commonhold and Leasehold Reform Act 2002. However, there are a number of reasons the system has failed to gain traction subsequently. The 2002 legislation is not fit for use in increasingly large and complex buildings. Permitted leases – such as shared ownership leases – are not dealt with. The legislation allows existing leasehold buildings to be converted to commonhold, but only with the unanimous consent of leaseholders, their freeholder, and all lenders, which in practice is all but impossible to achieve.

The use of commonhold has remained voluntary and in direct competition with the long-established (and well-understood) leasehold system. Ground rents have been retained in the leasehold system (although were abolished for almost all new residential leasehold properties in 2022), making it a more attractive system for investors and creating a sophisticated ground rents market. Successive governments have done little to nurture or encourage the uptake of the commonhold system and a 2020 Law Commission report found that fewer than 20 commonhold developments had been created since the legislation came into force.

What is changing?

Over the last nine years, there has been a government push to revive commonhold in the UK. In 2017, the Law Commission was asked to review the commonhold model, and in 2020 it produced its final report to the UK and Welsh governments, Reinvigorating commonhold the alternative to leasehold ownership. In 2025, the government published the Commonhold White Paper and in 2026, the draft Commonhold and Leasehold Reform Bill.

The draft bill proposes a substantially revised commonhold framework, a ban on leasehold for most new flats, easier routes for existing leaseholders to convert to commonhold, a £250 annual cap on many existing ground rents before reducing them to a peppercorn after 40 years, and the abolition of forfeiture for long residential leases in favour of a new enforcement regime.

There has also been a specific consultation, ‘Moving to commonhold: banning leasehold for new flats’, which ran from January to April 2026. That consultation sought views on the scope of the proposed ban, exemptions, timing, transitional arrangements and the wider commonhold framework.

On 27 May 2026, the Housing, Communities and Local Government Committee published its report on the draft bill. The committee described the draft legislation as a significant step towards giving homeowners greater control, but said changes are still needed if the final bill is to meet leaseholders’ expectations and previous government pledges. In particular, it questioned why ground rents should take 40 years to reduce to zero, suggested the government justify that timeframe or consider 20 years instead, and recommended that the £250 cap could begin in late 2027 – one year earlier than the government’s current timetable. The committee also called for regulation of managing agents through an independent regulator with meaningful enforcement powers.

So what happens next?

The committee’s report requires the government to respond to its recommendations within two months of its publication. An amended bill is expected to be introduced to Parliament in autumn 2026, with the aim of receiving royal assent by mid-2027. Implementation is likely to be phased.

For organisations and professionals in the housing sector, the direction of travel is clear: commonhold is moving from a little-used leasehold alternative to the intended default model for new flats. Developers, investors, lenders, landlords, managing agents and leaseholders should now be reviewing how the proposed framework may affect existing portfolios, pipeline schemes and future building management arrangements.