Commonhold Reform: What Is Proposed and What Is Law

Commonhold is a real form of ownership in England and Wales, and has been since Part 1 of the Commonhold and Leasehold Reform Act 2002 was brought into use in 2004. What is new is the government’s intention to make it the normal way flats are owned, and that intention sits in a White Paper, a draft Bill and a consultation rather than in an Act. The distinction matters, because directors are already asking whether to defer decisions until commonhold arrives.

What Commonhold Actually Is

In a commonhold you own your flat freehold. There is no lease, so no term running down, no ground rent and no third party landlord. The shared parts, structure, roof, corridors and plant, are owned by a commonhold association, which section 34 of the 2002 Act requires to be a private company limited by guarantee with members guaranteeing £1.

Registration is what makes land commonhold. Under section 1, land is commonhold land where the freehold estate is registered as commonhold, the articles of the association specify it, and a commonhold community statement is in place. Section 11 requires that statement to specify at least two parcels as commonhold units, section 31 provides that it sets out the rights and duties of the association and the unit-holders, and section 15 provides that it cannot prevent or restrict the transfer of a unit.

The commonhold community statement, usually shortened to CCS, does the work a lease does in a leasehold block. Under the reformed model, most of it would be standardised in law as a core CCS, with each commonhold free to add local rules on matters such as pets or use of shared space. For a decision you have to make this year rather than in several, the live comparison is still between right to manage, a residents’ management company and buying the freehold.

Why Almost No Commonhold Exists

Fewer than 20 commonhold developments have been established since the 2002 Act, comprising fewer than 200 units. That figure is the government’s own, given in the Commonhold White Paper and repeated in the guide to the draft Bill. Against roughly five million existing leasehold properties in England and Wales, commonhold has effectively not launched.

The government sets out several reasons, worth reading because the draft Bill is built around them.

• The 2002 framework was not designed for large or complex sites, and worked badly for mixed-use developments where commercial and residential owners need separate decisions.
• Shared ownership homes could not sit inside a commonhold at all.
• Converting an existing building required unanimous consent. Section 3 of the 2002 Act requires consent from the registered proprietor of the freehold, of any leasehold estate granted for more than 21 years, and of any registered charge: in practice every leaseholder, every lender and the freeholder.
• Leasehold stayed the default, was better understood by the industry, and generates secondary income streams that commonhold cannot.
• Successive governments did little to promote commonhold, including through their own housing supply programmes.

The Law Commission was asked in 2017 to review the model, consulted in 2018, and published Reinvigorating commonhold: the alternative to leasehold ownership on 21 July 2020. It made 121 recommendations, 102 about new supply and 19 about converting existing leasehold buildings. The White Paper of March 2025 is the government response to that report.

What Is Law Today and What Is Only Proposed

This is the part most commentary blurs. The table below separates the two.

The sequence so far: the Commonhold White Paper, command paper CP 1270, in March 2025; the draft Commonhold and Leasehold Reform Bill on 27 January 2026, published with a consultation called Moving to Commonhold that ran until 24 April 2026; pre-legislative scrutiny by the Housing, Communities and Local Government Committee from 4 February 2026, reported as HC 40 on 27 May 2026, with the government reply published on 14 July 2026; and a Commonhold and Leasehold Reform Bill listed in the King’s Speech on 13 May 2026.

When this article was written in August 2026, Parliament’s bills database did not list a Commonhold and Leasehold Reform Bill as having been introduced. A draft Bill is a policy document, not legislation. Until a Bill is introduced, passed and commenced, none of Parts 1 to 5 has legal effect, and the detail can change during passage.

The Proposed Ban on Leasehold for New Flats

Part 2 of the draft Bill would restrict the grant or assignment of a long lease of a new flat, a long lease meaning one of more than 21 years. The intended effect is that new flats sold for home ownership have to be commonhold unless the lease qualifies for an exemption.

The ban is drawn broadly, catching five routes by which a flat reaches the market for the first time: a new block built partly or fully for home ownership; a house newly converted into flats; a commercial building redeveloped to contain flats; a purpose-built rental block whose owner later decides to sell; and other residential buildings where no flat currently has a long residential lease, such as a block in vacant possession that is refurbished and resold.

Existing leasehold flats are not caught. Owners can still sell, and landlords can still grant a new or replacement lease where one is needed, including on a lease extension or a variation requiring a regrant. Build to rent, social rented housing and student accommodation sit outside the ban while they remain solely for rent.

Compliance would be checked at three points: marketing, which must state the basis of any exemption; a warning notice to the buyer before exchange on an exempt flat; and a prescribed statement on registration at HM Land Registry. Mis-selling would entitle the buyer to redress, in most cases allowing them to acquire the flat as commonhold.

The date matters more than the drafting, and the date does not exist. The draft omits the commencement date, the transitional arrangements and the final list of exemptions, all of which went to the Moving to Commonhold consultation, which closed on 24 April 2026 with the government response still to be published. The ban is to be switched on only once the reformed framework is fully operational and the market has had time to adapt. Anyone quoting a firm year for the end of new leasehold flats is guessing.

Converting an Existing Block, and the 50 Per Cent Threshold

Conversion is a two-stage exercise and would remain so. First the leaseholders acquire the freehold through collective enfranchisement; only then can the building convert. The draft Bill does not change the first stage, it changes the second.

Today conversion requires 100 per cent of leaseholders to agree, along with their lenders. The draft Bill would reduce that to 50 per cent, matching collective enfranchisement so the same group can acquire the freehold and convert in one run. The qualifying criteria stay recognisable: a self-contained building with at least two flats, two thirds held by qualifying leaseholders, at least 75 per cent of the floor space in residential use, falling to 50 per cent once section 29 of the Leasehold and Freehold Reform Act 2024 is commenced (the same change has applied to Right to Manage claims since 3 March 2025), and at least 50 per cent of qualifying leaseholders participating. A block that has already enfranchised to a share of freehold would need only the 50 per cent consent.

A majority threshold creates a minority who did not agree, and the draft Bill deals with them directly. A leaseholder who declines becomes a non-consenting leaseholder: still a leaseholder, but with their lease amended to align with the CCS. They would lose the right to a lease extension and the right to challenge a service charge once it is presented, and in exchange become a member of the association, vote on the annual budget before it is set, and gain the right to buy the freehold of their unit.

That is a genuine transfer of rights, and directors should not present it to neighbours as a formality. The right to challenge a service charge at the First-tier Tribunal is one of the more useful protections in the leasehold system, and the proposal swaps a challenge after the money is spent for a vote before it is set. Whether that is the better deal depends on how well your building votes.

The former freeholder can elect, or be required, to retain the freehold of those units, and is compensated when the leaseholder later buys the unit or sells the flat. The draft Bill would phase these residual leaseholds out over time. On cost, the government’s position is that the main expense is the enfranchisement premium, with conversion itself comparatively modest.

How a Reformed Commonhold Would Be Run

For anyone who has served on an RMC board, the proposed model looks familiar in shape and different in emphasis. Decisions are taken by vote of the members rather than by reference to a lease, and the thresholds are fixed in law.

Two features deserve attention from directors. First, a reserve fund would be mandatory and held on statutory trust, useable only to meet the association obligations under the CCS, with periodic reserve fund studies by an appropriately qualified person, and separate funds allowed for particular assets such as a lift. Second, members vote on the annual budget before it is set, with directors able to raise additional requests during the year and to issue emergency assessments where genuinely warranted.

The role of a commonhold director would not differ greatly from that of an RMC or RTM company director. Both follow the articles, prepare annual accounts and report to Companies House. The stated difference is that commonhold articles require directors to seek member approval for key decisions, where an RMC board may do so but need not. Associations could still appoint managing agents, and where nobody will serve, unit owners or lenders could ask the tribunal to appoint a professional director.

Building safety duties do not soften. A commonhold association in a higher-risk building carries the same obligations as any other accountable person: registration with the Building Safety Regulator, an annual estimate of building safety income, and where it is the principal accountable person, a safety case report, a building assessment certificate on request, the golden thread and a resident engagement strategy.

What This Means for Your Block Now

Practically, nothing changes yet. A leasehold block stays leasehold until you choose otherwise and the reforms are in force. Conversion still starts with buying the freehold, which is the expensive part.

The proposals that will touch most South West blocks sooner are not the commonhold ones. The ground rent cap and the abolition of forfeiture in Parts 3 and 4 would apply to existing leases, and both change the balance of a familiar argument.

There is a way to prepare that costs nothing and is useful whatever Parliament does. Every discipline the reformed model would make compulsory is already good practice in a leasehold block: a funded reserve backed by a study of what the building will need, accurate building records, clean Companies House filings, and a board that puts the budget to members before it is set rather than defending it afterwards. A block run that way converts easily if it decides to, and is better run in the meantime if it does not.

If your board is deciding whether to enfranchise, convert later, or simply run the building better now, the useful conversation is with someone who can model each route against your actual lease and reserve position. Plymouth Block Management works with RMC and RTM boards across Devon, Cornwall and the wider South West on exactly that, with a fixed management fee agreed in advance. Speak to us before you commit to a route, not after.

Common Questions

The questions that come up most often from directors and leaseholders once they read past the headlines.

Sources

Everything above is taken from these, not from a summary of them:

1. Commonhold and Leasehold Reform Act 2002, Part 1: Commonhold legislation.gov.uk
2. The Commonhold Regulations 2004 (SI 2004/1829), regulation 1 legislation.gov.uk
3. The Commonhold and Leasehold Reform Act 2002 (Commencement No. 4) Order 2004 (SI 2004/1832), article 2 legislation.gov.uk
4. Commonhold White Paper: the proposed new commonhold model for homeownership in England and Wales (CP 1270) GOV.UK (MHCLG)
5. Draft Commonhold and Leasehold Reform Bill GOV.UK (MHCLG)
6. Moving to commonhold: banning leasehold for new flats GOV.UK (MHCLG)
7. Guide to the Draft Commonhold and Leasehold Reform Bill GOV.UK (MHCLG)
8. Commonhold project: Reinvigorating commonhold, the alternative to leasehold ownership Law Commission
9. The King’s Speech 2026 GOV.UK
10. Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill, First Report of Session 2026-27, HC 40 UK Parliament, Housing, Communities and Local Government Committee
11. Leasehold Reform (Ground Rent) Act 2022 legislation.gov.uk
12. UK Parliament bills database UK Parliament

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