The Leasehold and Commonhold Reform Bill which proposes to ban new leasehold flats and make commonhold the default tenure for residential developments is expected in the coming weeks.
In March 2025 the Government published the Commonhold White Paper which proposes reforms to both leasehold and commonhold property ownership.
What is Commonhold?
Commonhold is a form of property ownership which allows the owner of a flat to own the freehold interest of that flat (known as a ‘unit’) rather than “just” the leasehold interest. Unlike a leasehold flat, there is no lease term and so it is not a depreciating asset. There is no ground rent payable. All unit owners collectively own and manage the parts of the building and land which are not included within the unit (such as the communal areas) through a commonhold association. The commonhold association is a company, with the unit holders as members and directors.
Commonhold was introduced by the Commonhold and Leasehold Reform Act 2002 and was intended as an alternative to the leasehold system. However, there are currently very few commonhold properties in existence in England and Wales. The low uptake is believed to be attributed to unfamiliarity in the market, particularly among lenders, developers, and managing agents.
What does the Commonhold White Paper propose?
The White Paper builds on earlier Law Commission work to update and modernise the existing legislation so that it works better for mixed-use buildings and multi-block estates.
The White Paper includes proposals to ban new leasehold flats and make commonhold the default tenure for all types of residential developments, including mixed-use schemes, by 2029. This reflects the Government’s intention to shift the housing market away from leasehold, which has been criticised for its legal complexity, lack of flat owner control, and escalating costs.
The reforms are also intended to make it cheaper, quicker and simpler for existing leaseholders to convert their building to commonhold.
What’s next?
The draft Commonhold and Leasehold Reform Bill was expected to be published in the second half of 2025. Although this did not happen, Matthew Pennycook has indicated that it will be published in the coming weeks.
If you are a residential developer, own the freehold of a building or a leasehold property, and would like advice on what the reforms mean for you, please contact Pippa Garrod in our Property Litigation team: [email protected]
