Commonhold Meaning: What Is Commonhold Property Ownership?

Less than 0.01% of properties in the UK are commonhold with few, if any, in London. However, with new commonhold legislation on the way, this could soon change – with advocates claiming that this form of property ownership could address common complaints with the leasehold system.

There are only 184 commonhold developments in England and Wales as of June 2023, law firm Travers Smith claims.

But that may change if an upcoming Leasehold and Commonhold Reform Bill becomes law. This legislation is not the same as the recently passed Leasehold and Freehold Reform Act 2024.

I’ll update this article as the situation develops but for now, I’ll explain what commonhold property is and what the new legislation proposes to do.

Key takeaways: Commonhold in UK property

• The upcoming Leasehold and Commonhold Reform Bill aims to make commonhold the default tenure, addressing issues associated with leasehold ownership including ground rents and lease expirations.

• Commonhold gives flat owners freehold ownership of their properties and collective management responsibility of communal areas through a commonhold association.

• The system could give flat owners more control over maintenance and costs, as well as taking away the worry of leases expiring.

• However, commonhold property ownership has struggled to take off since its introduction in 2002, so any new legislation will need to make major changes to the market.

Commonhold meaning

Commonhold is a system of property ownership, primarily for flats or buildings with multiple units, including residential and mixed-use developments.

It removes the need for a landlord, as all owners share responsibility for repairs, decisions and rules set by a commonhold community statement.

Commonhold gives each flat or unit owner the freehold to their property indefinitely, rather than a leasehold for a set period.

Each owner participates in the management and costs of communal areas, such as hallways, roofs and gardens, through membership in a commonhold association. The association owns and manages these shared parts collectively.

Commonhold vs freehold vs leasehold property

It differs from other forms of property ownership in several ways:

Commonhold property

• Each property owner holds the freehold to their flat or unit indefinitely; there is no lease expiry.
• Owners jointly manage and maintain shared areas, such as stairways and gardens, through a commonhold association.
• A community statement sets out rules and obligations for owners and covers insurance, repairs and maintenance.

Leasehold property

• The property owner has a lease from the freeholder or landowner for up to 999 years, but many typical UK leases were only 99 or 125 years when they were granted.
• The leaseholder must pay ground rent, service charges and sometimes, ad hoc costs e.g. for major shared repairs.
• Ownership of the property returns to the freeholder when the lease runs out, unless extended or renewed; short leases may reduce property value.

Learn more about leasehold property – how much does it cost to extend a lease?

Freehold property

• The owner controls the building and the land it stands on.
• No ground rent or service charges apply, unless the property includes communal facilities.
• The owner handles maintenance and insurance, with control over management and alterations (if compliant with UK law, such as planning permission regulations).

Scotland has only one system, based on outright ownership after the Abolition of Feudal Tenure Act 2000.

Advantages and disadvantages of commonhold property

In theory, commonhold offers several advantages over leasehold properties in particular – but it also faces some disadvantages that affect owners compared to freehold ones.

Advantages

• Commonhold owners keep the freehold to their properties indefinitely and do not need to worry about expiring leases or their costly extensions.
• Owners avoid ground rent payments and the leaseholder-landlord relationship, which reduces costs as well as potential conflicts.
• They have collective control over repairs, budgets and the management of communal areas.

Disadvantages

• Commonhold owners must pay their share of communal costs; not paying puts the commonhold at risk of financial difficulty.
• Joint decision-making may lead to disagreements among owners, which can delay management or maintenance action for example.
• The legal framework for commonhold can lack flexibility for complex or mixed-use developments, potentially complicating management and cost-sharing responsibilities.

Commonhold and Leasehold Reform Act 2002

In the UK, the Commonhold and Leasehold Reform Act 2002 first introduced commonhold ownership and also made reforms to leasehold tenure.

• It introduced commonhold, a new form of property ownership. 
• It also gave some leaseholders the rights to manage their buildings more actively through the Right to Manage (RTM) process, letting them take control of property maintenance and services.

The ‘condo’ ownership system in the US and ‘strata titles’ in Australia partly influenced the introduction of commonhold law, which shares similar principles.

But by 2018, with so few commonhold properties established – fewer than 20, the Law Commission claims – the same body reviewed the problem and made recommendations in a 2020 report. These included:

• Making it easier for leaseholders to convert to commonhold.
• Allowing shared ownership leases to be included within commonhold.
• Making it easier to take action against owners failing to pay their share of the commonhold’s costs.
• Ensuring commonholds are well maintained and insured.
• Improving mortgage lenders’ confidence in commonhold to increase the choice of financing available for home buyers.

Following the King’s Speech 2024 and publication of a Commonhold White Paper: The proposed new commonhold model for homeownership in England & Wales in March 2025, the government plans to publish new draft legislation soon.

It claimed in a press release that commonhold is “a radical improvement on leasehold ownership” that will one day become the “default tenure” in its place.

What is the Leasehold and Commonhold Reform Bill (2025)?

Later in 2025, the government will likely publish a draft Leasehold and Commonhold Reform Bill that if passed, according to the constituency casework in the House of Commons Library, will:

• Enact remaining Law Commission recommendations to strengthen leaseholders’ rights around extending their lease, buying their freehold and taking over management of their building. 
• Modernise the legal framework, to directly address issues associated with the low popularity of commonhold ownership since its introduction in 2002.
• Include proposals from the government’s white paper around building new commonholds, increasing flexibility, improving dispute resolution procedures and so on.

The government also plans to consult on options to restrict the sale of new leasehold flats, with a view to commonhold becoming the default option instead.

FAQs

Is commonhold the same as freehold?

Each commonhold owner has the freehold to their property but shares ownership and management of communal areas through a commonhold association. Freehold itself means owning both a property and the land it stands on, with full control and responsibility, without shared management.

What is an example of a commonhold?

An example of a commonhold is a residential block of flats where each flat owner holds the freehold of their individual unit and collectively owns the shared areas – such as hallways, roofs and gardens through a commonhold association.

Can you get a mortgage on a commonhold property?

You can get a mortgage on a commonhold property, but currently, many lenders are cautious due to concerns about the commonhold association’s financial stability and management responsibilities. They may insist on specific conditions, such as appropriate insurance and protections in the commonhold community statement.

The government wants to address lenders’ concerns to make commonhold mortgages more widely available in the future.

Final thoughts: Commonhold property

London features the highest proportion of leasehold properties in the UK, with 1.3m homes (36%) having this ownership model according to official statistics.

The government’s aim to make commonhold the default ownership option instead of leasehold would therefore create widespread changes to the status quo in the capital.

As and when the new legislation progresses, I’ll continue to update this article with the latest information.

In the meantime, for further reading around property legislation in the UK, there are plenty of articles on the Fine Living blog including:

• Renters’ Rights Bill
• Non Resident Landlord Scheme
• Do You Need Planning Permission For A Loft Conversion?
• What Is A Party Wall Agreement?
• Right To Rent Checks
• Sinking Fund Meaning: What Is A Sinking Fund In Property?

Fine Living has a wide range of beautiful London properties available to buy or let – browse the portfolio. If you have any questions or would like to find out more about one of our properties, please don’t hesitate to get in touch.

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