Commonhold Property Explained
A comprehensive guide to commonhold, how it differs from leasehold and freehold, and what commonhold reform means for flat owners and block management in England and Wales.
What Is Commonhold?
Commonhold is a form of property ownership designed for multi-unit buildings such as blocks of flats, where each owner holds the freehold of their individual unit rather than a diminishing leasehold interest. It was introduced in England and Wales by the Commonhold and Leasehold Reform Act 2002 and came into effect in September 2004. The commonhold meaning can be understood simply: it is freehold ownership adapted for buildings with multiple owners and shared common parts.
Under commonhold, there is no external freeholder or landlord. Instead, the building's common parts are owned and managed by a commonhold association, a private company limited by guarantee in which every unit-holder is automatically a member. This structure gives unit-holders democratic control over commonhold management decisions, including maintenance, insurance, and the appointment of any professional block management company.
Unlike leasehold, a commonhold property does not have a lease term that reduces over time. There is no ground rent payable to a freeholder, no risk of the lease expiring, and no need for expensive lease extensions. Each unit-holder's interest is permanent and does not diminish in value simply because time passes. This is one of the central reasons why the Law Commission and successive governments have advocated for commonhold as a fairer alternative to leasehold for flat ownership.
How Does Commonhold Differ from Leasehold and Freehold?
Understanding the differences between commonhold, leasehold, and freehold is essential for anyone buying or managing a flat in England and Wales. Many people ask is commonhold the same as share of freehold, and the answer is no. While both give flat owners more control than standard leasehold, they are legally distinct structures.
For a deeper understanding of leasehold obligations and how they are managed professionally, visit our leasehold management page. If you are considering purchasing the freehold of your building through collective enfranchisement, we can guide you through that process as well.
The Commonhold Community Statement and Association Structure
Every commonhold development is governed by a commonhold community statement, a detailed legal document registered at the Land Registry that sets out the rights and obligations of each unit-holder and the commonhold association. It serves a similar function to the lease in a leasehold building, but with important differences in how obligations are structured and enforced.
The commonhold community statement typically covers:
The commonhold association is a company limited by guarantee, registered at Companies House. Every unit-holder is automatically a member, and directors are elected from among the unit-holders to oversee the management of the building. The association has the power to appoint a professional managing agent to handle day-to-day commonhold management, including maintenance, financial administration, and compliance.
At Block, we have the expertise to manage commonhold developments alongside our extensive portfolio of leasehold properties. Our understanding of the rights and responsibilities of property owners ensures that commonhold associations receive the same professional, transparent management service that we provide to freeholders and right to manage companies.
Problems with Commonhold: Why It Hasn't Been Widely Adopted
Despite its advantages, commonhold has been almost entirely unused since its introduction. Fewer than 20 commonhold developments have been registered in England and Wales since 2004. Understanding the problems with commonhold helps explain why leasehold remains the dominant form of flat ownership.
These problems with commonhold have led the Law Commission to publish detailed recommendations for commonhold reform, aimed at making the system workable for both new-build developments and existing buildings that wish to convert from leasehold.
Commonhold Reform: Is Commonhold Replacing Leasehold?
The question of whether commonhold is replacing leasehold has been central to property law reform discussions for over a decade. The Law Commission's 2020 report on commonhold reform made over 100 recommendations to reinvigorate the system, and the government has expressed support for making commonhold the default tenure for new-build flats in the long term.
Key commonhold reform proposals include:
The Leasehold and Freehold Reform Act 2024 addresses many leasehold grievances but does not yet implement the full commonhold reform programme. The government has indicated that commonhold legislation will follow in a subsequent bill. Until that happens, leasehold remains the predominant form of flat ownership, and professional leasehold management remains essential.
At Block, we stay at the forefront of these legislative developments. Whether your building is held under commonhold, leasehold, or freehold, we provide expert block management services that adapt to the legal framework governing your property.
Advantages and Disadvantages of Commonhold
For anyone considering commonhold property or exploring commonhold flats for sale, it is important to weigh the benefits against the current practical limitations. Understanding how does commonhold work in practice helps inform that decision.
Advantages
Disadvantages
Frequently Asked Questions About Commonhold
What is commonhold management?
Commonhold management is the administration of a commonhold development by its commonhold association, a private limited company in which every unit-holder is automatically a member. The association is responsible for maintaining the common parts, collecting commonhold assessments (the equivalent of service charges), enforcing the commonhold community statement, arranging buildings insurance, and ensuring regulatory compliance. Many commonhold associations appoint a professional block management company to handle day-to-day management on their behalf.
Why did commonhold fail?
Commonhold has not failed in a legal sense, but it has seen almost no take-up since the Commonhold and Leasehold Reform Act 2002 came into force in 2004. The main reasons include the requirement for unanimous consent from all leaseholders and the freeholder to convert an existing leasehold building, the lack of mortgage lender familiarity with commonhold titles, the absence of a secondary market for commonhold flats, limited awareness among developers and conveyancers, and the entrenched commercial interests of freeholders who profit from ground rents and lease extension premiums under the leasehold system.
Is commonhold better than leasehold?
Commonhold offers several advantages over leasehold, including outright freehold ownership of each unit, no diminishing asset through a wasting lease term, no ground rent payable to a freeholder, and democratic control of the building through the commonhold association. However, leasehold remains better understood by lenders, conveyancers, and buyers, and has a well-established legal framework supported by decades of case law. Whether commonhold is better depends on individual circumstances, but many commentators and the Law Commission regard commonhold as the fairer and more transparent system of flat ownership.
Who owns the land under a commonhold arrangement?
In a commonhold arrangement, each unit-holder owns the freehold of their individual unit. The common parts of the building, including the structure, foundations, roof, communal hallways, gardens, and shared facilities, are owned and managed by the commonhold association. The commonhold association is a company limited by guarantee in which all unit-holders are automatic members. This structure means there is no separate external freeholder, and the unit-holders collectively control the entire building through the association.
How does commonhold differ from freehold?
Traditional freehold gives the owner absolute ownership of the land and any buildings on it in perpetuity. Commonhold adapts the freehold concept for multi-unit buildings such as blocks of flats. Each unit-holder owns the freehold of their individual unit, but the common parts are owned by the commonhold association rather than by any individual owner. The commonhold community statement governs the rights and obligations of each unit-holder, replacing the covenants and restrictions typically found in a lease. Unlike a conventional freehold, commonhold comes with mandatory membership of the commonhold association and obligations to contribute to the upkeep of the common parts.
What are the disadvantages of commonhold?
The main disadvantages of commonhold include extremely low take-up in England and Wales meaning few buyers and conveyancers have experience with the tenure, reluctance from some mortgage lenders to lend on commonhold titles, difficulty converting existing leasehold buildings because unanimous consent from all leaseholders and the freeholder is required, limited case law compared with leasehold making legal outcomes less predictable, the risk that a poorly run commonhold association may be harder to challenge than a professional managing agent, and the relatively untested nature of enforcement mechanisms within the commonhold community statement.
Need Expert Commonhold or Block Management Support?
Whether your building is held under commonhold, leasehold, or freehold, Block delivers professional, transparent management tailored to your property's legal structure. From commonhold associations to right to manage companies, we have the expertise your building needs.