Commonhold set to replace leasehold as default tenure in England and Wales
The UK Government has confirmed plans to make commonhold the default tenure for new build flats, aiming to abolish the leasehold system for these properties while retaining leasehold for existing homes. The Commonhold and Leasehold Reform Bill will soon enter Parliament.
The Government’s 2024 manifesto pledged to end the “feudal” leasehold system, with commonhold positioned as the future default tenure for new build flats. On 29 April, the Housing Minister reaffirmed this commitment and announced the imminent parliamentary progress of the Commonhold and Leasehold Reform Bill. This legislation will ban the sale of new build leasehold flats and enable leaseholders of existing buildings to convert to commonhold, while also improving leasehold protections for those who remain under that system.
Commonhold offers greater autonomy to residents by removing the traditional freeholder role and placing management responsibilities directly with the occupants through a commonhold association. This model aims to foster a more democratic and engaged approach to building management, with all commonholders automatically members of the association. However, this autonomy comes with significant responsibility, including compliance with complex legislation such as the Fire Safety Act 2021 and the Building Safety Act 2022.
Government’s approach to leasehold reform and commonhold
The Government recognises that abolishing leasehold entirely is not feasible in the short term. There are approximately five million existing leasehold properties, and converting all of these to commonhold immediately would be impractical. Therefore, leasehold will continue to exist alongside commonhold for the foreseeable future, with reforms aimed at improving leasehold rights and management.
Mortgage lenders have expressed concerns about the standards of maintenance under commonhold, highlighting the need for strong regulatory oversight. The Government’s approach seeks to balance the benefits of resident-led management with safeguards to ensure building safety and proper upkeep.
Commonhold’s design includes mandatory 10-yearly building surveys and the requirement to maintain reserve funds for major works, addressing long-standing issues in leasehold where sudden, large bills can cause financial distress for leaseholders. The model also benefits from simplified accounting and standardised legal documents, making it more transparent and easier to understand than leasehold.
Comparing commonhold with leasehold and enfranchisement
Some leaseholders already have options to gain control over their buildings through collective enfranchisement or the Right to Manage, which allow them to buy the freehold or take over management responsibilities. Despite this, commonhold is expected to offer advantages by providing a clearer, more democratic structure where all residents are members of the managing association.
Unlike many leasehold arrangements where not all leaseholders participate in the freehold or management company, commonhold ensures full membership and voting rights for all commonholders. This inclusivity can lead to more effective decision-making and a stronger sense of community ownership.
However, commonhold requires active involvement from residents, who must be willing to take on management duties and financial responsibilities. This may not suit all property owners, especially those seeking a more passive investment.
Practical implications for landlords and letting agents
For landlords, the shift to commonhold as the default tenure for new build flats means future acquisitions will come with a different legal and management framework. Letting agents will need to familiarise themselves with commonhold structures and governance, as well as the associated compliance obligations.
Landlords should prepare for the possibility that commonhold properties may require more direct engagement with resident management associations and a clearer understanding of building maintenance responsibilities. The presence of reserve funds and mandatory surveys could improve transparency around service charges and major works costs, potentially reducing disputes.
Existing leasehold landlords will still operate under the improved leasehold regime, but should monitor the progress of the Commonhold and Leasehold Reform Bill closely to understand how conversion rights and enhanced protections might affect their portfolios.
Uncertainties and future developments to monitor
While the Government has committed to making commonhold the default tenure, many details remain uncertain. The exact provisions of the Commonhold and Leasehold Reform Bill are yet to be finalised, and how the transition from leasehold to commonhold will be managed in practice is unclear.
Mortgage lenders’ current reluctance to lend on commonhold properties could slow market acceptance unless addressed through regulatory or financial industry changes. The capacity of residents to manage buildings effectively under commonhold, especially in larger or more complex developments, also remains to be tested.
Landlords and agents should watch for further guidance and statutory instruments accompanying the Bill, particularly regarding compliance with safety legislation and the administration of commonhold associations.
What landlords should consider now
Landlords should begin reviewing their leasehold properties to understand potential impacts from leasehold reforms and conversion opportunities. For new acquisitions, it is important to assess whether the property is commonhold or leasehold and understand the management structure and obligations involved.
Letting agents should update their knowledge and training on commonhold governance and compliance requirements to advise clients effectively. Monitoring lender policies on commonhold will also be critical for financing and investment decisions.
Maintaining clear records of service charges, building maintenance, and communications with management bodies will be essential to navigate the evolving regulatory environment.
Supporting landlords through tenure changes with TLA
The Landlord Association (TLA) provides members with access to up-to-date compliance resources and practical guidance on emerging tenure reforms such as the transition to commonhold. TLA’s new property management and compliance platform, ORBIT, currently in BETA testing, is designed to help landlords and letting agents organise property records, manage rental documents, and track regulatory developments related to building management and tenancy law.
Through TLA membership, landlords can access expert insights on leasehold reform, commonhold governance, and safety obligations, helping them prepare for changes and maintain compliance. ORBIT’s tools for recording repairs, inspections, and communications will support landlords in managing the increased responsibilities that commonhold may entail.
Explore TLA membership and learn more about ORBIT BETA access to stay informed and organised as the tenure landscape evolves.
Looking ahead, the passage of the Commonhold and Leasehold Reform Bill will be a pivotal moment for the UK rental sector. Landlords and agents should engage with the legislative process and prepare for a gradual shift in how multi-unit residential properties are owned and managed.
Sources: Landlord Today
TLA - The Landlord Association