For property investors and buy-to-let landlords, the practical significance of commonhold is threefold. First, for anyone buying a new-build flat in the coming years, the likelihood of encountering a commonhold property — rather than the traditional leasehold — is increasing as government policy shifts and developers adapt. Understanding how commonhold works before buying is important. Second, for existing leasehold flat owners, the planned expansion of commonhold is part of a broader reform package alongside LFRA 2024 that is transforming the leasehold market — improvements to the right to extend leases, the right to buy the freehold, and service charge transparency all affect the value and manageability of leasehold investment property. Third, for landlords who let commonhold units, the rules on subletting are governed by the Commonhold Community Statement rather than a lease — and those rules need to be understood before entering a tenancy.
The fundamental difference between commonhold and leasehold is the nature of ownership. A leasehold flat is a fixed-term interest in land — the leaseholder owns the right to occupy for the remaining term of the lease (which shrinks every year). A commonhold unit is a permanent freehold interest — it does not have an expiry date. This distinction has profound implications for valuation: a flat with a short lease (under 80 years) becomes increasingly difficult to sell and mortgage, requiring expensive lease extension; a commonhold flat has no such problem. For long-term property investors, the absence of lease decay risk is a significant advantage.
How commonhold works — the commonhold unit, commonhold association and CCS
The legal structure of a commonhold development and what it means for flat owners:
- Commonhold unit, commonhold association and the Commonhold Community Statement: Commonhold unit: each individual flat (or other defined unit) in a commonhold development is a 'commonhold unit' — registered at HM Land Registry as a separate freehold title. The unit-holder owns the unit outright, without a landlord above them or a lease running down. Commonhold association: the common parts of the building — the stairwell; roof; foundations; external walls; shared services — are owned by the commonhold association, a company limited by guarantee registered at Companies House. Every commonhold unit-holder is automatically a member of the commonhold association; there is no separate purchase of membership required. The commonhold association manages the building on behalf of all unit-holders: commissioning repairs and maintenance; collecting commonhold assessments (the equivalent of service charges); maintaining insurance; appointing contractors. The association must hold annual general meetings; maintain accounts; file with Companies House. Commonhold Community Statement (CCS): the governing document of the commonhold — it is registered at Land Registry alongside the title to each unit. The CCS specifies: each unit's extent and boundaries; the allocated percentage of the commonhold assessment each unit contributes; what alterations are permitted in each unit and in the common parts; the rules on subletting (each unit-holder's ability to let their flat is governed by the CCS — some CCS documents restrict subletting or require notification to the association; landlords must check the CCS before letting a commonhold flat); the commonhold association's powers and procedures. The CCS can be amended, but typically requires a significant majority of the unit-holders to agree (usually 75% or more). Commonhold assessment: the equivalent of a leasehold service charge — unit-holders contribute to the commonhold association's running costs in the proportion specified in the CCS. Unlike leasehold service charges, commonhold assessments are not controlled by LTA 1985 s.19 (the 'reasonable amount' test) — the CLRA 2002 has its own dispute resolution mechanism. If unit-holders dispute the assessment, they can go to the county court. The Leasehold and Freehold Reform Act 2024 introduces new service charge transparency requirements for leasehold; the government has indicated it will introduce equivalent provisions for commonhold assessments.
- Why commonhold has been rare, LFRA 2024, and what it means for landlord investors: Why commonhold has been rare since 2002: despite the CLRA 2002 coming into force in 2004, only approximately 20-30 commonhold schemes have ever been created in England and Wales — almost entirely new-build developments; no existing leasehold block has ever converted. The reasons: (a) mortgage lenders were initially unfamiliar with commonhold and many refused to lend on it — the Council of Mortgage Lenders advised its members to lend cautiously on commonhold; lenders have gradually become more comfortable but familiarity remains lower than for leasehold; (b) developers strongly preferred leasehold — the leasehold model generates revenue through ground rent escalation clauses; estate management charges; building insurance commissions; and continuing management fees; commonhold removes all of these; (c) converting an existing leasehold block to commonhold requires unanimous consent of all leaseholders and the freeholder — in practice, unanimity is almost never achieved in multi-flat blocks; (d) the CCS drafting requirements were perceived as complex; professional advice was needed to create a valid commonhold scheme. LFRA 2024 and the future of commonhold: the Leasehold and Freehold Reform Act 2024 does not mandate commonhold; it primarily focuses on strengthening leaseholders' existing rights (right to extend; right to buy freehold; service charge transparency; abolition of most ground rents for existing leases over time). However, the government has explicitly stated its intention to make commonhold the default for new-build flats in England and Wales — a policy that will require a further Commonhold Bill (expected within this Parliament). A UK Commonhold Council (comprising mortgage lenders; developers; professional bodies; conveyancers) has been consulting on what a workable commonhold system for new-build and conversion would look like. Landlord investor implications: (a) if buying a new-build flat from around 2025-2027 onwards, there is an increasing chance it may be offered as commonhold rather than leasehold — check the title before exchanging; (b) a commonhold flat has no lease expiry risk; no lease extension cost; no marriage value discount; these advantages make commonhold attractive for long-term hold investments; (c) letting a commonhold flat: check the CCS for subletting rules — some require notification to the association; some restrict the maximum duration of tenancies; subletting restrictions in a CCS are contractually binding on the unit-holder; (d) the market value of commonhold vs leasehold: comparables are sparse; in the long run, as commonhold becomes more prevalent, leasehold flats (especially those with shorter leases) may be relatively disadvantaged in value
Frequently asked questions
What is commonhold and how is it different from leasehold?+
Commonhold is a form of freehold ownership for individual flat units — each unit-holder owns their flat as a permanent freehold rather than a depreciating leasehold interest. There is no landlord above the flat owner; no lease counting down; no ground rent; no need for a lease extension. Common parts (stairs, roof, foundations) are owned and managed by a commonhold association — a company whose members are all the flat owners. Under leasehold, a flat owner holds a fixed-term interest (typically 99-999 years) from a freeholder, paying ground rent and service charge; when the lease gets short (under 80 years), the flat becomes harder to sell and mortgage and requires expensive lease extension. Commonhold eliminates all of these risks.
Can I let my flat if it is commonhold?+
Yes — but you must check the Commonhold Community Statement (CCS) for the development before granting a tenancy. The CCS is the governing document for the commonhold, registered at Land Registry, and may include provisions on subletting: some CCS documents require the unit-holder to notify the commonhold association before letting; some impose maximum tenancy durations; some restrict subletting without the association's approval. These CCS provisions are legally binding — breaching them can result in a compliance order. Once you have confirmed the CCS permits subletting (with any required notifications made), you then let the flat in the normal way under an AST (or occupation contract in Wales), subject to all standard landlord legal obligations.
Will commonhold become the default for new-build flats in England?+
The UK government has committed to making commonhold the default form of ownership for new-build flats in England and Wales — but this requires further primary legislation (a 'Commonhold Bill') beyond the Leasehold and Freehold Reform Act 2024, which addressed leaseholders' existing rights rather than mandating commonhold. The Commonhold Council (an advisory body convened by the government) has been consulting on making commonhold work for developers and lenders. The direction of travel is clear, but the timing of implementing legislation is uncertain. Landlords buying new-build flats from the mid-2020s onwards should check whether they are being offered on a leasehold or commonhold basis.
Can an existing leasehold block convert to commonhold?+
Technically yes, under CLRA 2002 — but in practice, a conversion requires unanimous consent of all qualifying leaseholders and the freeholder, which is almost never achieved in a multi-flat block. Even a single dissenting leaseholder can block the conversion. The Commonhold Council has consulted on whether to lower the threshold for conversion (for example, to 80% of leaseholders), but any change would require new legislation. For the foreseeable future, commonhold conversions of existing leasehold blocks will remain extremely rare. Leaseholders in existing blocks should instead look at their rights under LFRA 2024 (right to extend; right to buy freehold collectively; service charge reform).
- Leasehold enfranchisement — collective freehold purchase by leaseholders →
- Lease extension — statutory and informal procedures for short leases →
- Leasehold and Freehold Reform Act 2024 — key changes for landlords →
- Right to manage — RTM statutory procedure →
- Residential Management Company — RMC director duties and service charge →
- Ground rent reform — abolition and restrictions under LFRA 2024 →