This will be a seismic change for the real estate sector in England and Wales, and will have significant consequences for housebuilders, real estate developers, residents, investors and operators of real estate operational businesses, such as retirement housing. The commonhold project sits alongside leasehold reform, whereby the Government is gradually introducing the Leasehold and Freehold Reform Act 2024 to improve the rights of homeowners on managed estates in England and Wales.
To date, commonhold is a little used and poorly understood tenure for holding any type of property within England and Wales, with many reported flaws. The Leasehold reform, and renewed attention on Commonhold has meant that can no longer be the case.
Commonhold is a type of freehold tenure. Each unit owner holds both the freehold ownership of a single unit and membership of the commonhold association which owns and manages the common parts. Unlike leasehold, where the owner's interest is time-limited, a commonhold owner owns their unit outright and there is no landlord.
These issues were the subject of a substantial report undertaken by the Law Commission, "Reinvigorating commonhold: the alternative to leasehold ownership" published on 21 July 2020 and containing 121 recommendations which aim to make commonhold not just a workable alternative to residential leasehold ownership, but the preferred alternative.
The Government issued a white paper about its proposals in March 2025, which we cover in this article "Exciting times: the Commonhold White Paper". It confirms that a consultation will be published later this year, and subsequently a draft Leasehold and Commonhold Reform Bill.
Developers
Once commonhold is re-introduced, all new flats will need to be set up on a commonhold model. This will be reasonably straightforward in a simple block of flats, but becomes more complex for mixed-use schemes (where the developer will need to understand how the commonhold fits into other parts of the scheme that might be held on freehold or leasehold titles) and multi-phase schemes (where the developer will temporarily sit alongside residents on the commonhold association and will have the benefit of limited permitted development rights.
Investors
Once the new regime has been implemented, investors will no longer be able to purchase the freehold of a newbuild block of flats. The Government intends to simplify the process of converting flats from leasehold to commonhold, and whichever option is chosen this will have major consequences for freeholders of existing blocks of flats.
Lenders
In its open letter to lenders in July 2020, the Law Commission showed its understanding that "the support of mortgage lenders is vital to the success of commonhold", and it has taken lenders' interests into account in several respects. Lenders will however need to assess whether it has done enough to allay their concerns about commonhold, such as the risks of schemes falling into disrepair or commonhold associations becoming insolvent.
