The UK government’s revitalisation of commonhold marks a major structural reform in residential property tenure across England and Wales. Long sidelined since its introduction in 2002, commonhold is now positioned as the intended replacement for the leasehold model in multi-occupancy buildings. For Residents' Management Companies (RMCs) and Right to Manage (RTM) boards, this legislative momentum signals a long-term transition away from landlord-tenant relationships toward genuine freehold co-ownership.
Key takeaways
- The government has published the draft Commonhold and Leasehold Reform Bill, establishing a statutory roadmap to make commonhold the default tenure for new-build flats.
- Commonhold currently represents less than 0.01% of residential housing in England and Wales, with fewer than 20 developments registered under the 2002 Act.
- The upcoming reforms enact the Law Commission’s recommendations to modernize commonhold governance, accommodate complex mixed-use schemes, and resolve lender concerns.
- For existing blocks, conversion will remain voluntary; proposed legislation focuses on replacing the prohibitive 100% unanimous consent requirement with a workable statutory majority threshold.
- Resident-led boards (RMCs and RTM companies) already practice resident governance, making them the most structurally prepared entities to transition to Commonhold Associations.
The Evolution of Commonhold Policy
When commonhold was introduced under the Commonhold and Leasehold Reform Act 2002, it was designed to give flat owners indefinite freehold ownership of their homes alongside shared ownership of communal areas. However, uptake remained negligible: fewer than 20 commonhold associations were established in two decades, largely because the original legislation required 100% unanimous agreement from all leaseholders and mortgage lenders to convert an existing block.
While the Leasehold and Freehold Reform Act 2024 enacted important transparency rules and valuation adjustments, it left core commonhold reform for dedicated legislation. Under the draft Commonhold and Leasehold Reform Bill, the government is tackling the structural defects of the 2002 Act:
- Banning New Leasehold Flats: Introducing a statutory prohibition on developers selling new-build apartments on long leases, making commonhold the default legal structure for future developments.
- Modernising Commonhold Community Statements (CCS): Standardising the statutory rules governing shared maintenance, reserve fund contributions, and dispute resolution.
- Mixed-Use Flexibility: Introducing "sections" within commonhold structures to protect residential unitholders from being outvoted by commercial units in mixed-use buildings.
What This Means for Existing RMCs
For RMCs currently managing leasehold blocks, commonhold reform does not represent an overnight abolition of their existing leases. The government's policy is built on an elective conversion pathway rather than compulsory retrospective conversion.
However, RMCs already operate on principles closely aligned with commonhold:
- Resident Governance: RMC directors already manage service charge budgets, commission communal repairs, and navigate statutory consultations on behalf of their neighbours.
- The Structural Shift: In a commonhold conversion, the RMC structure and the overarching tripartite lease are superseded by a Commonhold Association and a Commonhold Community Statement.
- Eliminating Landlord Reversions: Conversion permanently extinguishes third-party freehold interests, ground rent liabilities, and the risk of lease forfeiture, granting unitholders direct freehold title over their individual flats.
Lowering the Conversion Barrier
The central challenge for existing blocks has always been achieving consensus. The Law Commission’s recommendations, forming the core of the new legislative proposals, propose lowering the conversion threshold:
- Majority-Based Voting: Removing the 100% unanimous consent requirement, enabling blocks to convert with the backing of a qualified majority of leaseholders.
- Protecting Dissenting Leaseholders: Establishing statutory mechanisms—such as leasebacks or preserved tenancy terms—so that leaseholders who cannot or do not wish to convert are not disenfranchised or forced to take on new financing arrangements.
- Lender Standardization: Creating standardized security agreements with UK mortgage lenders to ensure that commonhold units are as readily mortgagable and saleable as traditional freeholds.
Preparing for Future Tenure Transitions
While existing leasehold blocks face no mandatory deadline to convert, resident-led boards can prepare for future reform by strengthening their internal governance today:
- Audit Title Documents and Covenants: Understand the current legal framework of your building, including lease terms, commercial unit percentages, and shared plant ownership.
- Maintain Open-Book Financial Records: Operate ring-fenced statutory trust accounts under Section 42 of the Landlord and Tenant Act 1987 and build clear Planned Preventative Maintenance (PPM) reserve funds.
- Foster Resident Engagement: Establish clear, transparent communication channels so that if the board decides to explore commonhold conversion once primary legislation commences, the leaseholder community has the collective consensus and financial clarity required to proceed.