How Many Commonhold Properties Are There in the UK?
Commonhold property ownership is an established concept in UK law which offers several advantages to owners of property in relation to current leasehold arrangements. Despite its benefits, it remains significantly underutilized, with fewer than 20 registered commonhold developments currently in the UK.
For scale the total number of properties in the area are many times the number of commonholds illustrated here.
This article examines the reasons for the limited take up of commonhold property and then turns to initiatives aimed at encouraging its development, with particular reference to the prospects for commonholds replacing leaseholds in the foreseeable future.
The reforms could make commonhold the default residential building ownership model and our lawyers look at the proposed changes in more detail and what they may mean for commonhold in the UK property market.
Take control of your property – discover how to convert your building from leasehold to commonhold with expert Commonhold Association guidance from The Freehold Collective.
How Many Commonhold Properties Are There in the UK?
Fewer than 20 commonhold developments currently exist in the UK, according to the most recent data. This translates to less than 200 individual commonhold units in total across England and Wales, based on figures from the government published Ministry of Housing, Communities & Local Government 2024 Commonhold White Paper.
By contrast, in 2023-24, there were an estimated 4.83 million leasehold dwellings in England. The majority of leasehold properties are flats which are sold as a package with a new house. This equates to 19% of the English housing stock, highlighting the enormous disparity between policy aspirations for commonhold expansion and its real-world uptake. In most cases this is a long term but there is a terminal date after which the freeholder would be entitled to call for surrender of the lease.
Commonhold – the system of home-ownership advocated by Governments over recent years as an alternative to leasehold – is back in the spotlight, as the law commission has published a report on the problems and potential solutions to the commonhold reform. It’s been a subject of much promise from Governments, with numerous statements of support, as well as specific policies to promote the system. Now we have a detailed look at the reforms the law commission believe are required. The report sees commonhold becoming the default new housing tenure for flats, and legislation reversioned to its original intent.
Proposed amendments which are anticipated to be implemented soon are aimed at making commonhold more competitive as an alternative to leasehold by bringing legislation in line with current practice. The amendments will affect three principal issues: simplification of the process for owners to move to commonhold ownership, amendments to the management rules and the rights of owners of commonhold property. This is the reason for the need for substantial changes in law and practice in order to make commonhold a competitive and attractive option for owners and developers.
Why Is Commonhold Ownership So Rare?
In theory commonhold has a lot to offer but in practice there are a number of barriers to its adoption, this paper aims to identify and examine the reasons why the commonhold product is so rarely found in the UK property market.
Key barriers to UK commonhold properties include:
- Lender Reluctance: Mortgage lenders have historically been hesitant to finance commonhold units, viewing them as a higher risk due to their unfamiliarity.
- Developer Preferences: Developers often favor the leasehold model, which allows them to maintain an ongoing income stream through ground rents, service charge, and fees. Of importance also are the developer’s costs in relation to the freehold and any mechanisms they may have for exiting the lease.
- Legal Complexity: The legal framework for commonhold is perceived as complex, with insufficient infrastructure to support seamless transactions. This results in disputes and difficulties in management for owner occupiers.
- Awareness Issues: Both public and professionals, including solicitors and estate agents, often lack awareness or experience with commonhold. The perceived or actual cost of the recurring service charge in leasehold properties can be a major barrier to purchase for owner occupiers. The recurring service charge in leasehold property can also be a financial barrier for owner occupiers.
- Optional Adoption: Commonhold is not a mandatory requirement, even for new developments, which means developers often opt for the more traditional leasehold system, a legacy of the feudal system of property ownership.
Alternative approaches to freehold ownership are considered in this chapter. Freehold ownership of a property is defined as a full outright permanent fee simple ownership of the property as opposed to leasehold and commonhold ownership which entails a completely different concept. Commonhold was introduced as an alternative to leasehold property and aims to overcome some of the problems of leasehold by removing the inherent conflicts associated with the interest and by providing a more sensible and flexible approach to property ownership and management.
Commonhold has failed to gain traction since it was introduced as a leasehold alternative in 2002. Reform of the current system could be greatly benefited by making it easier to convert a leasehold property into a commonhold (including where there are multiple interested parties).
What’s Being Done to Encourage More Commonhold Properties?
There are currently initiatives and proposals in place to encourage the use of commonhold as a form of land ownership. Initiatives and proposals are also working towards promoting and implementing the concept to its full potential in order to enable it to deliver its promised benefits. It offers hereditaments that are perpetual, no ground rent to pay and most importantly for leasehold flat owners, a far greater degree of control over the property.
- Law Commission Proposals: In 2020, the law commission published a series of proposals designed to reform and revitalize the commonhold system. The proposals are intended to simplify the current regime, to facilitate the conversion of existing leasehold properties to common ownership, and to help the existing (long leaseline) leaseholders of properties which are already held under leases.
- Future Legislation: The government published a draft leasehold and commonhold reform bill, which is expected to introduce significant changes to leasehold law and the leasehold basis of property ownership. The legislation is intended to prohibit the sale of new leasehold homes and convert them to commonhold. However existing leaseholders will still be affected.
- Government Support and Consultation: Ongoing consultations aim to gather feedback from stakeholders, with the government expressing support for making commonhold a more viable option. The proposals are being received positively with commonhold potentially becoming a more viable alternative.
- Political Will: While commonhold is frequently mentioned in discussions about leasehold reform, concrete actions remain pending. Although there has been an interest in this recently, little has been done to move matters forward. Commonhold is sometimes confusingly labelled as a condomanian model, popular in the US and Australia, but the proposals on the desk in England relate to a far more traditional model whereby owners have responsibility for their part of the building, usually through freehold ownership.
In multi occupation buildings the commonhold association is responsible for the running of the premises. On a freehold basis owners of commonhold units have ownership of the width of the building allocated to the unit but are also responsible with other owners for the parts of the premises that are shared with others. Owners may find it difficult to come to a view as to what should be done with shared areas and equally difficult to enforce any decision that is made; this problem being particular acute in larger premises. In some retirement schemes there are age limits and the commonhold approach can provide a suitable structure and flexibility for these schemes.
Will Commonhold Ever Replace Leasehold?
It is increasingly asked whether or not commonhold will replace leasehold. That is not such a straightforward question.
- Technical Possibility: With the right reforms, commonhold could technically replace leasehold. The leaseholder does have the right to eventually purchase the freehold of the property or to convert the leasehold to a commonhold or freehold. Although there is technically the potential for leasehold to be replaced by commonhold or freehold, it is unlikely to happen anytime soon due to deeply entrenched and inflexible interests and structures within the sector.
- New-Build Feasibility: Commonhold is more feasible for new-build developments, where the legal framework can be integrated from the outset, rather than retrofitting existing leasehold properties.
- Industry Shift Requirement: For commonhold to become mainstream, a significant shift in industry practices and legal support is necessary. The reforms need to work in practice for larger properties that are held as freehold leases and need to be converted to common ownership. There is a current lack of understanding about commonhold and the commonhold characteristics.
- Growing Support: There is a growing movement among campaigners, leaseholders, and reform groups advocating for commonhold as a fairer system. While a victory is far from certain there is clearly growing support which in time should translate to both policy changes and mainstream adoption as the superior method of residential property ownership.
While uncommon,Commonhold Association is possible with the right guidance.Contact us to learn more.
A Comparative Look at Commonhold vs Leasehold
So just to clarify the differences between commonhold and leasehold in a handy table……
| Feature | Commonhold | Leasehold |
| Ownership | Owners have full freehold ownership of their plot but also share ownership of the common land. | Leaseholders own the right to occupy, not the property itself. |
| Duration | Perpetual ownership. | Leasehold property has a limited time period, the lease, and this can vary between a few years and 125 years. |
| Ground Rent | No ground rent payable. | Ground rent is often required. |
| Management / Financial Obligations | These are managed by the owners of the houses in the development themselves and are usually free of any service charge payable to a freeholder. | These charges are set and collected by the freeholder or building managing agents, and owners are responsible for paying a proportion of the service charge. |
| Conversion | Complex but possible from leasehold. | Not applicable. |
Summary and Key Takeaways
Although commonhold has potential, there is currently a large difference between what it could offer and the limited take up that there is to date. With fewer than 200 commonhold units having transferred into common ownership compared to millions of leasehold homes, it is important to identify the barriers to take up and explore options for overcoming these.
- Current Adoption: Fewer than 20 commonhold developments exist, encompassing fewer than 200 units across England and Wales.
- Barriers to Adoption: Mortgage lenders’ reluctance to finance due to perceived risks, developers’ preference for leasehold due to ongoing income, complex legal framework and lack of awareness among stakeholders. The legal framework surrounding shared ownership and other forms of ownership is complex and there is little understanding of how they could work in practice. Once a leasehold interest is created the relationship between landlord and tenant can rapidly turn sour and prove difficult to manage.
- Efforts to Promote Commonhold: The law commission published its 2020 proposals to simplify legal processes, with key parts including reforms to make commonhold more accessible and attractive. The law commission published a consultation paper in 2020 setting out proposals to simplify the rules and process for transferring ownership of property (including flats) and to reform the rules of sale in order to promote commonhold. The government are planning to make commonhold the default tenure for new flats, break the ‘ground rent trap’ and bring an end to sellers describing leasehold properties as freehold.
- Future Prospects: Technical feasibility for new-builds, requirement for industry-wide shifts in practices and legal frameworks, and increasing advocacy and support from reform groups. Government plans indicate commitment to promoting commonhold as a viable alternative to leasehold.
Whether or not commonhold becomes the leasehold alternative is a matter of some significance. For the property owner, commonhold is an alternative to leasehold, providing perpetual ownership of a property rather than a lease which expires. Of course, leasehold reforms are what many interested in this alternative will be reading about in this article.
Our Commonhold Association Service is designed for leaseholders who want to take full control of their property, empowering them to manage both their individual flats and shared spaces through a unified ownership model. Under this service we assist leaseholders in taking ownership and control of their property whilst also allowing them to manage their property as well as the communal areas under a common model of property ownership.
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