Leasehold Guide
What Is Commonhold?
Commonhold is a way of owning a flat outright rather than on a lease. Each flat is a freehold unit, and the shared parts of the building are owned and run collectively by the flat owners through a commonhold association.
Commonhold meaning, in plain terms
Under leasehold, you own the right to occupy your flat for a fixed term granted by a landlord, and that term runs down over time. Under commonhold, you own your unit as freehold, with no lease, no landlord and no expiring term.
Everything outside the individual units — the structure, roof, hallways, grounds and plant — is owned by the commonhold association, a company limited by guarantee. Every unit owner is automatically a member of it, so the people who live in the building are the people who control it.
The rules are set out in a commonhold community statement, which does the job a lease does in a leasehold building: it defines the units, sets out obligations for repairs and behaviour, and explains how costs are shared.
Commonhold was introduced in England and Wales by the Commonhold and Leasehold Reform Act 2002. Very few developments have used it so far, though it features heavily in current discussion about reforming flat ownership.
How commonhold differs from leasehold
The differences that matter most to a flat owner are ownership, control and cost.
- Ownership: freehold unit with no expiring term, so no lease extension and no diminishing value as a term runs down
- Landlord: none, so no ground rent and no third-party freeholder with competing interests
- Control: unit owners collectively run the building through the commonhold association
- Rules: a commonhold community statement rather than individual leases, so obligations are consistent across every unit
- Costs: a commonhold assessment funds running costs and a reserve fund, serving the same purpose as a service charge
Commonhold questions
Does commonhold mean no management costs?
No. Buildings still need insurance, maintenance, cleaning, compliance and accounts, and those still have to be paid for. The commonhold assessment replaces the service charge. What changes is who decides how the money is spent.
Can a commonhold association appoint a managing agent?
Yes, and most do. Running a building is a substantial job, and directors of a commonhold association are usually residents with day jobs. The association appoints the agent and can replace them, which is a meaningful difference from most leasehold arrangements.
Can an existing leasehold block convert to commonhold?
It is possible in principle, but in practice conversion requires the consent of the freeholder, all leaseholders and any lenders with an interest, which is why it has rarely happened.
Is commonhold the same as share of freehold?
No, though they are often confused. Share of freehold means leaseholders collectively own the freehold company while still holding leases. Commonhold removes the leases altogether.
Related pages
- Leasehold Service ChargesWhat a leasehold service charge covers, how budgets and reserve funds are set, when charges can be challenged, and what a managing agent should provide each year.
- What Is Estate ManagementWhat residential estate management means, what a specialist estate management company does day to day, and how it differs from lettings and sales.
- Managing AgentsIndependent managing agents specialising in residential estate management across Oxfordshire, London and the Thames Valley, with regular site inspections and clear communication.
Resident-controlled building?
We work for resident management companies, right to manage companies and commonhold associations, reporting to the people who live there.