Background: a new stage in leasehold reform
In our previous article, we discussed the proposed ground rent reforms, including the planned cap on ground rents for existing leasehold properties. These reforms form part of a wider effort to address concerns about the leasehold system in England and Wales.
On 27 January 2026, the Government published the draft Commonhold and Leasehold Reform Bill, which aims to modernise the system and promote commonhold ownership as the preferred model for flats in the future.
Understanding leasehold ownership
Leasehold ownership is the most common structure for flats in England and Wales. Under this system:
- A leaseholder owns the right to occupy a property for a fixed period, such as 99 or 125 years.
- The freeholder retains ownership of the land and building.
- Leaseholders typically pay ground rent and service charges to the freeholder or managing company.
While leasehold has long been used to manage multi-occupancy buildings, it has faced increasing criticism in recent years due to rising ground rents, complex service charges, and limited control for leaseholders over how their buildings are managed. These concerns have contributed to the Government’s broader efforts to reform the system.
What is commonhold?
Commonhold is an alternative form of property ownership introduced in England and Wales in 2002.
Under a commonhold structure:
- Individual owners hold the freehold title to their flats, known as “units”.
- Owners collectively manage shared parts of the building, such as hallways, roofs, and communal spaces.
- A commonhold association is responsible for managing the building and maintenance costs
Unlike leasehold, there is no landlord and no lease term that expires, giving homeowners greater control over the management and long-term future of their building.
Key differences between leasehold and commonhold (I might put them into a table to compare)
Leasehold
- Ownership is limited to a fixed lease term
- A freeholder owns the building and land
- Leaseholders may pay ground rent and service charges
- Major decisions about building management may be controlled by the freeholder
Commonhold
- Owners hold permanent freehold ownership of their units
- No ground rent is payable
- Building management is controlled collectively through a commonhold association
- Owners have a direct say in budgeting, maintenance, and management decisions
The Government’s reform agenda aims to make commonhold the default structure for new flats, replacing the traditional leasehold model over time.
Why commonhold has been rarely used
Although commonhold was introduced in England and Wales in 2002, adoption has remained limited. This has largely been due to developer preference for leasehold structures, lender caution, and practical challenges in converting existing leasehold buildings. The proposed reforms aim to address these barriers and make commonhold a more viable ownership model in the future.
Potential impact on landlords and tenants
For landlords and investors
Professional freeholders may see a reduction in traditional leasehold investment opportunities if commonhold becomes the default structure for new developments. This could affect income streams such as ground rent and other landlord-controlled charges.
For tenants and leaseholders
Homeowners may gain greater control over the management of their buildings, potentially improving transparency in costs and decision-making.
However, commonhold ownership also means residents take on greater responsibility for the management and maintenance of their building, which may require effective governance structures and cooperation among owners.
What this could mean for the future of property ownership
The draft reforms indicate a potential long-term shift in how residential buildings are owned and managed in England and Wales.
By promoting commonhold and restricting the use of leasehold for new flats, the Government appears to be moving toward a system where property owners have greater control over their homes and shared buildings, aligning the UK more closely with ownership models used in many other countries.
However, the transition will likely take time, particularly given the large number of existing leasehold properties.
How we can help
At Chan Neill Solicitors LLP, our residential property team regularly advises clients on leasehold and freehold transactions, including matters involving leasehold reform and changes to property ownership structures.
We assist homeowners, landlords, and investors in understanding how legislative developments may affect property transactions, management arrangements, and long-term ownership structures.