Commonhold – The New Leasehold Explained
Published on March 31, 2025 by Sarah Mac
The government is promising the “beginning of the end” for England and Wales’ outdated leasehold system. But what exactly is commonhold, and how will it affect landlords?
The leasehold system in England and Wales is undergoing its biggest shake-up in decades. For landlords and buy-to-let investors, particularly those with flats, the changes are likely to reshape how property is owned, managed, and maintained for years to come.
In a move that’s been described as the “beginning of the end” for England’s feudal leasehold model, the government has introduced wide-ranging reforms aimed at making homeownership fairer and more transparent.
At the centre of this transformation is “commonhold” – an alternative form of ownership that, while not new, is being promoted as the long-term replacement for leasehold.
But what exactly is commonhold, how does it differ from leasehold, and what should landlords know about the proposed changes?
In this article, we break down what commonhold means, explain the background to leasehold reform, and set out a clear timeline of what’s happening and when so you can stay informed and plan ahead.
What is commonhold?
Commonhold is a form of property ownership that offers an alternative to the traditional leasehold system, particularly for flats.
Under commonhold, each owner holds the freehold of their individual unit (such as a flat), while also jointly owning and managing the building’s shared areas – such as hallways, roofs, gardens and lifts – through a specially created company known as a “commonhold association”.
This model is widely used in other countries, but it has rarely taken off in the UK due to a range of legal, financial and practical barriers – something the government now aims to change.
Here are the key ways commonhold differs from leasehold:
No lease term limits: With commonhold, ownership is outright and indefinite. There are no 99 or 125-year lease terms that eventually need extending, removing one of the biggest issues faced by leasehold property owners.
No ground rent: Commonhold does not involve any ongoing ground rent payments which have been a source of controversy in the leasehold sector.
No external freeholder or managing agent: The building is collectively managed by the flat owners themselves, through a democratic structure. Decisions about maintenance and budgeting are made by the commonhold association, in which every unit owner has a vote.
For landlords, this could offer a simpler and more transparent way to own and manage flats in the future, though it comes with its own set of responsibilities.
Why is leasehold reform happening?
As a leaseholder, you don’t actually own the property you buy. Instead, you are in a landlord and tenant relationship with whoever owns the freehold of the building in which the flat is located. For leasehold houses, the same applies – the leaseholder does not ‘own’ the property. All you have is the right to live in that property for a set amount of time – whatever is showing on the lease.
The leasehold system has long been criticised as outdated and unfair, particularly for flat owners who often face high costs and limited control over their own properties.
Common issues include:
Escalating ground rents, sometimes doubling every few years with no clear benefit to the leaseholder.
Excessive or opaque service charges, with little recourse for those who feel overcharged.
Difficult and expensive lease extensions, which can significantly affect a property’s value and mortgage-ability as the lease term shortens.
Absentee or unresponsive freeholders, who may fail to maintain the building or communicate effectively with leaseholders.
These problems have created mounting dissatisfaction among both homeowners and property investors. For landlords, they can lead to strained tenant relationships, reduced property values and difficulties when trying to sell or re-mortgage.
In response, the government has made leasehold reform a priority. Its long-term aim is to phase out leasehold for most new flats and encourage a wider adoption of commonhold as the standard form of ownership for multi-occupancy buildings.
The current legislative push is part of this broader vision to simplify property ownership and hand back control to the people who live in – and pay for – these homes.
What’s in the Leasehold and Commonhold Reform Bill?
The Leasehold and Commonhold Reform Bill was introduced to Parliament in November 2023 and forms a key part of the government’s wider push to reform property ownership in England and Wales.
The Bill, which is still progressing through Parliament, proposes sweeping changes aimed at creating a fairer, more transparent system for homeowners, including landlords. The Commonhold White Paper was published earlier this month and sets out the government’s plans to provide immediate relief to leaseholders who are ‘suffering now’, as well as what they will do to bring the feudal leasehold system to an end.
Here are some of the key proposals of the Leasehold and Commonhold Reform Bill:
Ban on the sale of new leasehold flats: Whilst the Leasehold reform Act 2024 banned the sale of new leasehold houses other than in exceptional circumstances, the Leasehold and Commonhold Reform Bill will extend this to a ban on the sale of new leasehold flats, although the consultation as to the ‘best approach’ to this measure won’t be discussed until later in the year.
Removal of marriage value: The often-criticised “marriage value” – an extra cost added when extending a lease on a property with fewer than 80 years remaining – will be abolished. This change is expected to make lease extensions significantly cheaper.
990-year lease extensions: Leaseholders will gain the right to extend their leases to 990 years (up from the current 90 years for flats and 50 for houses) at a peppercorn ground rent, meaning no ongoing payments.
Greater transparency around service charges: Landlords and managing agents will be required to provide standardised, detailed breakdowns of service charges, making it easier for leaseholders to understand what they’re paying for, and to challenge unfair charges.
Reforms to support commonhold: The Bill includes measures to make the commonhold model more accessible and attractive. These include simplifying the legal process for converting existing buildings, and providing clearer rules for how commonhold associations should be run.
For landlords, these proposals could mean lower leasehold costs and fewer disputes – but also a shift in how leasehold flats are managed, especially in future developments.
Timeline of leasehold reform
While major reform is underway, the practical rollout of changes will take time. Although the Leasehold and Freehold Reform Act received Royal Assent in early 2024 and was expected to be in force by the end of March 2025, the reality is that much of the legislation is not yet in action.
Here’s a summary of what’s happened so far, and what is expected over the coming months and years:
2020–2023: Setting the groundwork
2020: The Law Commission published recommendations to reform leasehold and revive commonhold as a practical alternative.
2022: The Leasehold Reform (Ground Rent) Act came into force, banning ground rents on most new residential leases in England and Wales.
November 2023: The government introduced the Leasehold and Commonhold Reform Bill, alongside further measures in the now-passed Leasehold and Freehold Reform Act.
2024–2025: Early reforms and legal challenges
February 2025: Leaseholders are no longer required to wait two years after purchase to extend their lease or buy the freehold.
March 2025: Thousands more leaseholders in mixed-use buildings qualify for the Right to Manage. Freeholders can no longer automatically recover legal costs from leaseholders when RTM claims are made.
Before July 2025: A Judicial Review will be held after freeholders were granted permission to challenge parts of the Leasehold and Freehold Reform Act. The outcome could affect how and when certain elements are enforced.
Summer 2025: The government is set to consult on:
- How lease extension and enfranchisement premiums are calculated
- New consumer protection rules for homeowners on freehold estates
- Service charge transparency and the legal cost recovery process
Secondary legislation still required
- The Act relies on 25–30 pieces of secondary legislation to become fully operational.
- The government has made it clear that full implementation will take years, not months. In fact, last year Housing Minister Matthew Pennycook said they intend to end leasehold by the end of this parliament, in other words, by the next General Election in 2029.
Commonhold still to come
Commonhold remains a work in progress. Although the government has expressed support for its wider use, further consultation, legislative detail, and practical frameworks will be required before it can become the mainstream model for flats.
This timeline helps explain why landlords may not see much immediate impact yet. But change is coming, and it’s worth staying ahead of it.
What does leasehold reform mean for landlords?
While many of the reforms are still being phased in, the direction of travel is clear: leasehold, as we know it, is being dismantled, and commonhold is the government’s long-term vision for how flats will be owned and managed in the future.
For landlords, these reforms present both opportunities and challenges:
Lower costs for existing leaseholders
Changes such as the removal of marriage value and 990-year lease extensions could significantly reduce the cost of leasehold ownership, making long-term investments more viable.
Standardised service charges and increased transparency may also help landlords budget more effectively and avoid disputes with managing agents.
Reduced control in commonhold
Commonhold removes the traditional landlord–tenant dynamic. Instead, decisions are made collectively by all unit owners through a commonhold association.
This may reduce individual control over building management – particularly for landlords with only one unit in a block – while requiring more involvement in shared decisions.
The phasing out of leasehold for new flats
While leasehold will continue for existing properties, it’s expected that most new flats will eventually be sold on a commonhold basis.
Buy-to-let investors considering new-builds may need to understand the responsibilities of being part of a commonhold association and what that means in practice.
Uncertainty around implementation
Many reforms still require secondary legislation, further consultation, or court decisions to take full effect. This means the legal and practical landscape will continue to shift over the next few years.
Landlords should therefore stay informed and seek advice before making key decisions, particularly around lease extensions, buying leasehold flats, or investing in new developments.
Leasehold reform – final thoughts
Leasehold reform is well underway, but we are still in the early stages of a long transition. For landlords who own leasehold properties or who are thinking about buying one, it is important to understand how these changes may affect your rights, costs, and responsibilities in the coming years.
Commonhold offers a simpler and fairer alternative to leasehold, but it is not yet widespread, and further work is needed to make it a practical reality. In the meantime, reforms such as longer lease extensions, fairer service charge rules, and the removal of marriage value are expected to make leasehold ownership more manageable for landlords and leaseholders alike.
At SRP Inventories, we know how important it is to keep up with legal and regulatory changes, especially when they affect your responsibilities as a landlord. Our routine property inspections can help you stay compliant and protect your investment by identifying maintenance issues early and ensuring tenants are looking after your property.
If you would like to find out more about how we can support you, get in touch – we are here to help.