The Commonhold and Leasehold Reform Bill 2026 was at consultation and pre-legislative scrutiny stage at the time of writing. The specific mechanisms for new-build commonhold, voluntary conversion, and the consent thresholds required have not yet been finalised in statute. This post explains the framework as it stands and the direction the legislation is taking — check gov.uk for the current position before making any decisions based on this information.
Quick Answers
What is commonhold in simple terms?
You own the freehold of your flat outright — permanently, with no lease counting down, no ground rent, and no landlord. The shared building is owned and managed collectively by all flat owners through a Commonhold Association they all control.
Does commonhold already exist in England?
Yes — since 2002. But it has been used for fewer than 20 developments in England and Wales in over two decades. The legal framework exists; what has been missing is practical accessibility and lender familiarity. The 2026 Bill is designed to fix that.
Does this affect me now as a leaseholder?
Not immediately. Commonhold for new developments is the priority. A conversion route for existing blocks is coming — but the process, consent thresholds, and timeline are still being legislated. Watch the Commonhold and Leasehold Reform Bill progress.
The short answer: Commonhold is a form of permanent freehold ownership for individual flats within a shared building, combined with collective ownership and democratic management of the shared parts through a Commonhold Association. It replaces the landlord-tenant dynamic of leasehold entirely — there is no freeholder, no lease running down, and no ground rent.
Why it matters now: after 24 years of near-total non-use, the Government is legislating to make commonhold the default for new flat developments and to create a viable conversion path for existing leasehold blocks. For current leaseholders, conversion is not imminent — but understanding how commonhold works is the prerequisite for making informed decisions when that option becomes available.
Key Takeaways
Commonhold eliminates the three biggest problems with leasehold
No lease running down (and no extension premium), no ground rent, and no freeholder with power over the building's management. These are structural problems built into leasehold — commonhold removes the structure that creates them.
The Commonhold Association is the equivalent of an RTM company — but with ownership
In both structures, flat owners collectively manage their building. The difference is that an RTM company manages a leasehold building where the freeholder retains ownership; a Commonhold Association manages a building that the flat owners collectively own. The management model is similar; the ownership model is fundamentally different.
New-build commonhold is the first priority — conversions come later
The Government's sequencing is: make commonhold work well for new developments first, then open a conversion route for existing blocks. Existing leaseholders should not expect rapid conversion — the process will require legislation, lender adaptation, and significant coordination between leaseholders and freeholders.
Lender acceptance is improving but not yet universal
Major lenders have confirmed they will lend on commonhold properties — but their criteria, valuation approaches, and remortgage processes for commonhold are still developing. This is one of the practical reasons commonhold adoption has been slow despite being legal since 2002.
The Commonhold Community Statement replaces the lease
In a commonhold, the rights and obligations of unit owners are set out in a Commonhold Community Statement — a document registered with HMLR that functions like a constitution for the building. It replaces the individual leases and freeholder covenants of the leasehold system.
RTM directors are well-placed to understand commonhold management
The experience of running an RTM company — collective decision-making, service charge budgeting, maintenance planning, resident engagement — is directly transferable to running a Commonhold Association. The governance disciplines are the same; the ownership context is better.
What Commonhold Actually Is
Commonhold is a system of flat ownership in which each flat owner holds the freehold of their own unit, while all unit owners collectively own and manage the shared parts of the building through a company — the Commonhold Association — in which every owner is automatically a member.
The concept is not new or exotic. Most comparable countries — Scotland, Australia, Canada, the United States, much of continental Europe — use some form of collective freehold ownership for flats as their standard model. England and Wales are unusual internationally in having built such a large proportion of the housing stock on a landlord-tenant framework instead.
The Commonhold and Leasehold Reform Act 2002 introduced commonhold into English law — but the uptake was negligible. Fewer than 20 commonhold schemes were ever registered. The reasons were practical: lenders were unfamiliar with it, conveyancers were unfamiliar with it, the legislative framework had gaps that made developers nervous, and the established leasehold system — profitable for developers and freeholders — faced no competitive pressure to change.
What the 2026 legislation is attempting to do is different in ambition: not just make commonhold available, but make it the normal, expected form of new flat development — and create a working mechanism for existing leasehold blocks to convert if their leaseholders choose to.
Commonhold vs Leasehold: The Structural Difference
The difference between commonhold and leasehold is not just administrative — it is a fundamental difference in who owns what, who has power over the building, and what happens over time.
- Freeholder owns the building and land permanently
- Flat owners hold long leases — time-limited rights to occupy, not ownership
- Lease term counts down — value erodes below 80 years
- Ground rent may be charged (pre-2022 leases)
- Freeholder controls major decisions about the building unless RTM exercised
- Leaseholders must pay to extend their lease — often £tens of thousands
- Service charge disputes resolved via Tribunal against a freeholder who has structural advantage
- No freeholder — the concept does not exist in this model
- Each flat owner holds the freehold of their unit — permanently, no expiry
- No lease running down, no extension premium, no lease event horizon
- No ground rent — not permitted in a commonhold structure
- The Commonhold Association — controlled democratically by all owners — manages the building
- Rules and obligations set by the Commonhold Community Statement, registered with HMLR
- Disputes between unit owners and the Association resolved via Tribunal — no structural imbalance
| Feature | Leasehold | Commonhold |
|---|---|---|
| Ownership of unit | Long lease (time-limited) Not freehold | Freehold — permanent True ownership |
| Lease term | Counts down — extension required below 80 years | No lease — no term to manage |
| Ground rent | Zero (post-June 2022 leases) or capped at £250 (existing leases) | Not permitted — by definition zero |
| Building management | Freeholder (or RTM company if exercised) | Commonhold Association — owned by all unit holders |
| Governing document | Individual lease + building regulations | Commonhold Community Statement (registered at HMLR) |
| Dispute resolution | First-tier Tribunal — leaseholder vs freeholder or manager | First-tier Tribunal — unit owner vs Commonhold Association |
| Mortgage availability | Widely available (subject to lease length and ground rent criteria) | Available — lender criteria developing |
| Service charges | Collected by freeholder / manager; subject to LTA 1985 reasonableness test | Commonhold Assessment — collected by Association; equivalent protections apply |
How a Commonhold Association Works
The Commonhold Association is a private company limited by guarantee — every unit owner is automatically a member, and the Association is run by directors elected by the members. In governance terms, it functions very similarly to an RTM company. In ownership terms, it is significantly different — because the Association collectively owns the common parts of the building (the structure, roof, communal areas) rather than managing them on behalf of a freeholder.
The key documents that govern a commonhold are:
- The Commonhold Community Statement (CCS) — registered with HM Land Registry, this sets out the rights and obligations of unit holders, the rules of the commonhold, how the Association is governed, and how costs are shared. It is the equivalent of the lease and building covenants combined into a single, democratically amendable document.
- The Commonhold Assessment — the annual budget for maintaining and running the common parts, analogous to the service charge. Each unit owner contributes according to their allocated percentage share, which is set in the CCS.
- The Reserve Fund — as with RTM-managed leasehold blocks, a well-run Commonhold Association will maintain a reserve fund for major future expenditure. The 2026 Bill is expected to include provisions making reserve fund planning a formal requirement within commonhold.
Day-to-day management decisions are made by the Association's directors, who are elected by the unit owner members. Major decisions — such as amending the CCS, taking on significant borrowing, or making major capital investments — require a vote of the members, typically at an annual general meeting.
The governance model of a Commonhold Association is not significantly more complex than running a well-managed RTM company — and in some ways it is simpler, because there is no freeholder to negotiate with, no Section 20 consultation directed at an external party, and no lease interpretation disputes. The disciplines are familiar: budgeting, maintenance planning, resident engagement, record-keeping. What changes is the ownership context in which those disciplines operate.
Why Commonhold Is Coming Now — After 24 Years of Non-Use
The short answer is that the political will has finally arrived — driven by sustained leaseholder campaigning, the Law Commission's 2020 reports, and a recognition that the leasehold system is internationally anomalous and systematically exploitative.
The 2002 framework failed for specific, identifiable reasons that the current legislation is designed to fix:
- Unanimous consent requirement for conversion — the original framework required unanimous agreement from all leaseholders and the freeholder to convert an existing block to commonhold. This was an impossible threshold in practice. The 2026 Bill is expected to lower this.
- No mechanism for dealing with mortgage lenders — conversion required all mortgage lenders on the block to consent, with no prescribed process for obtaining or withholding that consent. The new legislation will include a clearer framework.
- Developer resistance — developers had no commercial incentive to build commonhold rather than leasehold when the leasehold model allowed them to sell the freehold to a ground rent investor as a separate income stream. New-build mandatory commonhold removes this incentive structure.
- Lender unfamiliarity — lenders were reluctant to lend on commonhold without established case law and market practice. Wider adoption creates the market data lenders need.
Converting an Existing Leasehold Block to Commonhold
Conversion of an existing leasehold block to commonhold is the most complex element of the reform — and the one where the legislative detail matters most.
The expected framework under the Commonhold and Leasehold Reform Bill 2026:
The Government consulted on lowering the consent threshold from unanimous to a majority — likely 50% or two-thirds of leaseholders by number or value. The exact threshold was not finalised at the time of writing. This is the critical variable: a lower threshold makes conversion more accessible; a higher one protects dissenting leaseholders but makes conversion harder to achieve.
For conversion to work, the freeholder's interest must be extinguished — either voluntarily (the freeholder sells the freehold to the leaseholders) or compulsorily (the leaseholders exercise a right to acquire the freehold, analogous to collective enfranchisement). The valuation methodology for the freeholder's interest in a conversion is one of the most contested aspects of the reform.
Each unit owner who has a mortgage will need their lender to confirm that the mortgage can continue on commonhold terms. The 2026 Bill includes a prescribed process for obtaining lender consent, with a default that consent should not be unreasonably withheld. A unit owner whose lender refuses consent may need to remortgage before the conversion can proceed.
The CCS — the governing document of the new commonhold — must be prepared, agreed by the converting leaseholders, and registered with HM Land Registry. A prescribed template CCS is expected to be published alongside the legislation to simplify this process for residential blocks.
The Commonhold Association must be registered as a company, and each unit's freehold title must be registered separately at HMLR. This is the final step that completes the conversion — from this point, unit owners hold freehold titles and the Association owns the common parts.
For the full context of the Commonhold and Leasehold Reform Bill 2026, including the ground rent cap, enfranchisement reforms, and service charge changes, see our post on the Draft Commonhold and Leasehold Reform Bill 2026: What It Means for Leaseholders and Freeholders.
What Commonhold Means for RTM Directors
If you are currently running an RTM company, the prospect of commonhold raises a specific question: what happens to your RTM structure if the block converts?
The short answer is that conversion to commonhold would supersede the RTM arrangement. The RTM company exists to manage a leasehold building on behalf of a freeholder who retains ownership. In a commonhold, there is no freeholder and no leasehold — so the RTM framework becomes irrelevant. The Commonhold Association takes over as the management entity, and the RTM company would need to be wound up or its functions transferred.
This is not a problem — it is the intended outcome. RTM is a transitional step within a system the Government wants to reform. The experience and governance disciplines that RTM directors have developed are directly applicable to running a Commonhold Association. The practical work is the same; the legal context is better.
For RTM directors considering whether to pursue commonhold conversion, the key questions are:
- Does your lease have features — ground rent, a short remaining term, a difficult freeholder — that make conversion particularly attractive?
- Is there sufficient consensus among leaseholders to meet whatever consent threshold the 2026 Bill sets?
- Are all or most leaseholders in a position to have their mortgages transitioned to commonhold terms?
- What is the freeholder's likely position — cooperative or resistant — and what does that mean for the cost and timeline of conversion?
None of these questions can be answered today with certainty — the legislative detail is still being finalised. But understanding them now means you will be ready to assess the conversion option properly when the legislation is in force.
Legislative Timeline: Where Commonhold Reform Stands
Frequently Asked Questions
Commonhold is a form of freehold ownership for flats within a shared building. Each flat owner holds the freehold of their own unit outright, while collectively owning and managing the shared building through a Commonhold Association — a company in which all unit owners are members.
There is no landlord, no lease that runs down, and no ground rent. The framework has existed in England and Wales since 2002 but has been almost entirely unused; the Government's 2026 legislation is designed to make it the default model for new flat ownership and to enable existing leaseholders to convert.
Under leasehold, a flat owner holds a long lease from a freeholder who retains ultimate ownership of the building and land. The lease eventually expires, ground rent can be charged, and the freeholder retains significant legal power over the building's management.
Under commonhold, there is no freeholder and no lease. Each flat owner holds the freehold of their unit permanently, and the building's shared parts are managed collectively through the Commonhold Association, which all unit owners control democratically.
The Commonhold and Leasehold Reform Bill 2026 is expected to introduce a formal conversion mechanism for existing leasehold blocks. The details of the consent threshold required were subject to consultation at the time of writing.
Conversion will require the agreement of leaseholders and the freeholder, as well as a formal process of registering the commonhold with HMLR. The Government has signalled that conversion will be designed to be accessible rather than prohibitively complex.
A Right to Manage company takes over management of a block but does not change the underlying ownership structure — leaseholders still hold leases from a freeholder. A Commonhold Association is the management body within a fundamentally different ownership structure where there is no freeholder and no lease.
RTM is a management transfer within the leasehold system; commonhold replaces the leasehold system entirely. For leaseholders currently in an RTM company, conversion to commonhold would mean superseding the RTM structure and registering a new Commonhold Association.
The general expectation among property professionals is that commonhold ownership should be neutral to positive for flat values over time — particularly compared to leases with problematic ground rent provisions or those falling below 80 years.
However, there is limited UK market data given how rarely commonhold has been used since 2002, and the actual impact will depend on how lenders and buyers respond as it becomes more widespread.
Most major lenders have indicated they will lend on commonhold properties, and the 2026 Bill includes a prescribed process for obtaining lender consent to conversion, with a default that consent should not be unreasonably withheld.
The conversion process itself requires lender consent where a flat is mortgaged — any conversion to commonhold must ensure existing mortgage lenders are notified and their interests protected in the new ownership structure.
Questions about what leasehold reform means for your block?
Neon helps RTM directors and leaseholders across London and Essex navigate the changing leasehold landscape — from current compliance obligations to understanding what commonhold conversion might mean for their specific building.
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