Commonhold may not be a ‘silver bullet’ for leaseholders
Last week, the prime minister announced – via TikTok no less – the publication of its long-awaited draft Commonhold and Leasehold Reform Bill, a major step towards its manifesto promise of ending the “feudal” leasehold system.
The Bill will seek to cap ground rents on existing long residential leases at £250 a year(reducing to a peppercorn after 40 years), ban new leasehold flats and abolish forfeiture – the process through which leaseholders can lose their home by defaulting on a debt as low as £350. It will also explore moving leaseholders to a commonhold model whereby homes will be owned without any term limitation, and homeowners will control how their buildings are managed.
The pros
The leasehold system has long been lambasted and so the reinvigoration of a more flexible tenure, such as commonhold (this time with some muscle), is welcome.
There are a number of benefits to commonhold, not least the flexibility and autonomy offered. Although the commonhold community statement (the document that essentially replaces the leases) is mostly prescribed, it will sit alongside local rules that can be tailored to individual buildings and amended where necessary, offering a degree of efficient adaptability that should be encouraged.
A uniform system where everyone lives by the same rules is also beneficial from a fairness standpoint, especially if based on a well-drafted commonhold community statement and local rules. The removal of third-party landlords and certain procedural elements, such as the section 20 procedure for major works, should also make management easier.
Just like Australia’s strata title and Japan’s unit-ownership system, leaseholders could even see their property values rise under a commonhold system due to their indefinite ownership, leading to higher property appreciation and greater buyer confidence. So the scope for tangible gain is high.
The cons
That said, a forced moved to commonhold may not be the silver bullet leaseholders are hoping for. It is still a form of communal living and a lot of the challenges leaseholders face under the current system could well persist under a new tenure.
First, commonhold does not offer a fixed contractual position in the same way a lease does and, as such, it can be changed. Although any change will require a vote taken by other commonholders, the group may have very different views, agendas and financial backing. The impact this could have on property values remains to be seen.
Second, the widely lauded concept that commonhold will give homeowners complete control is not strictly true. Budgets will be set by the directors of the commonhold association (the company of which all commonholders will be a member), with commonholders having little input and no right to challenge the reasonableness of maintenance and repair costs. The truth is that directors (rather than the commonholders themselves) will have significant power and authority; and worryingly, directors need not own a commonhold unit.
Third, commonhold probably won’t be cheaper than leasehold. Moving to a commonhold system won’t eliminate the underlying costs of building maintenance and management, it will just shift responsibility for those costs directly on to the owners. While leaseholders will escape ground rent, forfeiture risk and lease extension costs, the commonhold association will need to manage and pay for all capital expenditures, without a freeholder to share the risk or cost.
In cases where a reserve fund is not required in the existing leases, introducing one under commonhold could actually make it more expensive for commonholders on a month-by-month basis. And if a commonhold association has liquidity problems or becomes insolvent, there is no freeholder to step in.
Phased delivery
So how should the government introduce this system effectively to achieve its goals and keep its manifesto promises?
Introducing the new commonhold system in phases seems to be the most workable option, starting first and foremost with new developments. This will make sure that all relevant parties and the wider market understand the structure and can stress-test the mechanics of the system before it is rolled out for wider conversion.
Careful consideration must be given in particular to the legal and practical aspects of how commonhold can be implemented in complex developments, especially in schemes with a mix of residential and commercial space.
Upskilling professionals – such as conveyancers and lenders – will be key to the success of the new model. At present, only a limited number of professionals have had any experience of commonhold, so ensuring a new generation understands the necessary nuances will be essential. In the same vein, regulating the role of managing agents will continue to be important, albeit there is no sign that this is on the horizon.
Finally, arming existing leaseholders with appropriate knowledge of commonhold will be key to its successful implementation; ensuring expectations are managed, not only in relation to the rights that commonhold will afford but also with regards to the responsibilities and shortcomings the new system may bring.
This text first appeared in Estates Gazette on 3 February 2026.
