Commonhold ownership is a freehold system for flats and other shared buildings in England and Wales, created by the Commonhold and Leasehold Reform Act 2002. Each flat owner holds a permanent freehold interest in their own unit, and a residents’ body called the commonhold association owns and manages the shared parts of the building. There is no landlord, no ground rent, and no lease ticking down toward expiry. In practice the system has barely been used since it was introduced, but a draft bill published in January 2026 would make commonhold the default for most new-build flats.
How Commonhold Differs From Leasehold
The point of commonhold is to strip out the features of leasehold that most frustrate flat owners. A leaseholder holds a wasting asset: a lease that runs down year by year and eventually reverts to the freeholder. A commonhold unit does not expire. You own the freehold of your flat outright, with no countdown clock and no need to pay a premium later on to extend a lease.
Two other leasehold features disappear as well. There is no ground rent, because there is no landlord to collect it. And the commonhold association cannot use forfeiture to threaten the loss of your home over unpaid charges. If you fall behind on your share of building costs, the association has to use ordinary court debt-recovery procedures rather than seizing the property.
What a Commonhold Development Contains
A commonhold development is split into two parts: individual units and common parts. The units are the private spaces, whether flats, offices, or retail premises, and each unit holder owns a freehold title that does not expire. Everything outside those units, including hallways, lifts, structural walls, and shared gardens, is common parts, owned and managed by the commonhold association.
The commonhold association is a private company limited by guarantee. If it becomes insolvent or is wound up, each member’s financial liability is capped at £1. Every unit holder is entitled to become a member, and only unit holders can be members. The association must keep a register of members under the Companies Act and update it whenever a unit changes hands.1Leasehold Advisory Service. Commonhold Associations So the people who own units in the building collectively run it, with no external landlord or imposed management company.
The Commonhold Community Statement
Every commonhold is governed by a document called the commonhold community statement. It is the building’s constitution. The statement sets out the boundaries of each unit, defines the common parts, and establishes the rules every owner must follow. Under the Commonhold Regulations 2004, it must follow a prescribed form and include all required provisions.2Legislation.gov.uk. The Commonhold Regulations 2004 Without a properly executed and registered statement, a commonhold cannot function.
The statement also carries the practical rules for how units may be used, covering matters such as noise, external alterations, and business activities. It binds every current and future owner, so buyers step into the same obligations as the seller.
Assessments and Reserve Funds
Each owner’s financial contribution comes through the commonhold assessment, which works like a service charge. The community statement specifies what percentage of the total each unit must pay, and those percentages must add up to 100 per cent, though individual units can be assigned a zero share in some circumstances.3Legislation.gov.uk. Commonhold and Leasehold Reform Act 2002 – Explanatory Notes The money covers insurance, maintenance, and management of the shared facilities.
The Act also allows regulations to require a reserve fund for long-term repair and upkeep. Money in the reserve fund cannot be taken to pay debts unrelated to what the fund was created for, even if a creditor holds a court judgment, unless the association is insolvent.3Legislation.gov.uk. Commonhold and Leasehold Reform Act 2002 – Explanatory Notes
Limits on Letting Your Unit
The Commonhold Regulations 2004 restrict how a residential unit can be let. Any lease must not be granted for a premium, must not run longer than seven years, and must not include an option to renew or extend beyond seven years.2Legislation.gov.uk. The Commonhold Regulations 2004 These rules stop commonhold from recreating the very leasehold structures it was designed to replace. Ordinary assured shorthold tenancies fit comfortably within the limit, but buy-to-let investors who prefer long leases will find the ceiling restrictive.
How Decisions Get Made
The commonhold association takes decisions by resolution at general meetings, and the threshold depends on what is being decided. Routine management decisions use an ordinary resolution, which passes on a simple majority of votes cast in person or by proxy. Amending the community statement, or another significant matter, requires a special resolution passed with at least 75 per cent of votes cast in favour.2Legislation.gov.uk. The Commonhold Regulations 2004
The highest bar applies to voluntary termination of the commonhold itself, which needs at least 80 per cent of all members to vote in favour.4Legislation.gov.uk. Commonhold and Leasehold Reform Act 2002 – Termination: Voluntary Winding-Up The tiered structure gives individual owners real influence over day-to-day management while requiring broad consensus for anything that fundamentally changes the development.
Enforcing Rules and Recovering Debts
Because units are freehold, the association cannot forfeit anyone’s home over a breach or unpaid bill, and it cannot stop a unit holder from selling. Instead, there is a structured enforcement process backed by ordinary court remedies.
When a unit holder breaches the community statement, the association must first serve a formal default notice setting out the complaint. The unit holder has 21 days to respond. After considering the reply, the association decides on the next step, but it is not obliged to escalate if it reasonably concludes that letting the matter go would better serve relations between owners.5Leasehold Advisory Service. Managing a Commonhold
For unpaid assessments, the association can charge interest at the rate set in the community statement and pursue the debt through the courts. If the unit is rented out, the association can direct the tenant to pay rent to it until the arrears are cleared. The court may grant a charging order against the unit; while such an order does not take priority over existing mortgages, it can eventually lead to a forced sale. If a unit changes hands before the debt is cleared, the community statement allows the association to serve notice on the new owner requiring payment within 14 days, after which interest starts to accrue.5Leasehold Advisory Service. Managing a Commonhold Disputes that cannot be settled informally can be brought before the First-tier Tribunal (Property Chamber), which has jurisdiction over commonhold matters under the 2002 Act.6GOV.UK. The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013
How Land Becomes Commonhold
Turning land into commonhold is a registration process handled through HM Land Registry. Before an application is filed, the organiser must secure written consent from everyone with a significant registered interest in the land. Section 3 of the 2002 Act specifies the categories that must consent:
- The registered freehold proprietor
- Anyone holding a registered lease originally granted for more than 21 years
- Anyone holding a registered charge over the land, including mortgage lenders
- Any other class of person specified by regulations
Missing even one required consent means the application will be rejected.7Legislation.gov.uk. Commonhold and Leasehold Reform Act 2002 – Section 3
The application itself is made on Form CM1. If there are already unit holders at the point of conversion, Form COV is submitted alongside it.8GOV.UK. Commonhold Land: Freehold Registration (CM1) Each person whose consent is required provides it on Form CON1, which identifies their interest and records their agreement.9GOV.UK. HM Land Registry Form CON1 – Consent to the Registration of Land as Commonhold Land Registration fees are fixed rather than value-based. For a new development without existing unit holders, the fee is £40 for up to 20 units, plus £10 for each additional batch of up to 20 units. For an existing development converting with unit holders already in place, the fee is £40 per unit converted.10GOV.UK. HM Land Registry Registration Services Fees
Once registration completes, the association is entitled to be registered as proprietor of the common parts, and each initial unit holder as proprietor of their unit. Any existing lease over the commonhold land is extinguished by operation of the statute once registration takes effect.11Legislation.gov.uk. Commonhold and Leasehold Reform Act 2002 – Section 9
Ending a Commonhold
A commonhold can be voluntarily dissolved, but the process is deliberately hard. The association’s directors must first make a statutory declaration of solvency under the Insolvency Act 1986. Members then vote on two resolutions: a termination-statement resolution setting out how the land and assets will be distributed, and a winding-up resolution. Both must pass with at least 80 per cent of members in favour.4Legislation.gov.uk. Commonhold and Leasehold Reform Act 2002 – Termination: Voluntary Winding-Up
If the vote is unanimous, a liquidator is appointed and must submit a termination application to the registrar within six months. If the vote passes with between 80 and 99 per cent support, the liquidator must first apply to the court for an order setting the terms and conditions of termination, then submit the termination application within three months of that order.4Legislation.gov.uk. Commonhold and Leasehold Reform Act 2002 – Termination: Voluntary Winding-Up
Why Commonhold Has Barely Been Used
The gap between commonhold’s promise and its reality is stark. Fewer than 20 commonhold developments have been created across England and Wales since 2004, covering fewer than 200 individual units. For context, there are an estimated 4.9 million leasehold dwellings in England alone.
The biggest obstacle for existing buildings is the unanimous consent requirement for conversion. The Law Commission has described this requirement as “almost impossible to satisfy” for anything larger than a handful of flats. Leaseholders cannot always be traced, buy-to-let owners have no interest in management change, some elderly owners lack the capacity to consent, and apathy runs high in larger blocks. Even where leaseholders are willing, their mortgage lenders may not be, and obtaining consent from every lender across a whole building is a remote prospect.12Law Commission. Reinvigorating Commonhold: The Alternative to Leasehold Ownership Freeholders have no incentive to cooperate either, because conversion means giving up their freehold interest along with ground rent income and lease-extension premiums.
Mortgage availability has been a further chokepoint even for new-build sites. As of April 2026, lenders representing only 40 per cent of the mortgage market have any functionality to lend on commonhold properties, and even those lenders have limited experience with the tenure. Lenders have said they need clearer valuation guidance from RICS, established risk models for the new ownership structure, workable enforcement and repossession processes, and a distinct Land Registry title designation to avoid confusion with ordinary freehold flats before they can lend at scale.13UK Finance. UK Finance Response to MHCLG Consultation on Moving to Commonhold Without mainstream mortgages, developers have little reason to offer commonhold and buyers have limited means to purchase it.
What the 2026 Draft Bill Would Change
The government published a draft Commonhold and Leasehold Reform Bill on 27 January 2026. It would ban the use of leasehold for most new-build flats, making commonhold the default, and modernise the framework to address the deficiencies that have kept the system dormant.14GOV.UK. Draft Commonhold and Leasehold Reform Bill A public consultation on the scope and timing of the proposed ban, including possible exemptions, ran until 24 April 2026.15House of Commons Library. Leasehold Reform in England and Wales: What’s Happening and When?
Lenders have broadly welcomed the direction of travel but insist that protections must be in place before any ban takes effect. Through UK Finance, the industry supports a single transition date with a five-year implementation period from the date secondary legislation is finalised.13UK Finance. UK Finance Response to MHCLG Consultation on Moving to Commonhold The Housing, Communities and Local Government Select Committee began pre-legislative scrutiny in February 2026.