Will Commonhold 2.0 be the answer…?!

• 14 March 2025
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The government published its much anticipated White Paper on commonhold on 3 March 2025, detailing its plans for commonhold to become the “default tenure” of ownership in England and Wales.

The White Paper is the precursor to a draft Commonhold Bill, which the government intends to introduce in the second half of this year. The White Paper introduces a new framework for commonhold which is based upon the Law Commission’s 2020 report – all of the Law Commission’s 121 recommendations for reform have been accepted, bar one. It is designed to generate a better understanding of how a new commonhold system might operate and importantly, it explains how the new system is likely to benefit consumers and property owners across a range of industries.

What is commonhold?

Commonhold is a form of freehold ownership. Individual property owners will own the freehold of their unit (i.e. a flat), and a share in the freehold of the communal areas of the whole property along with the other unit owners in the property. There are no landlords or leases. Instead, the collective ownership functions through a commonhold association, which is a company jointly owned and controlled by the commonhold unit owners. The unit owners’ rights and responsibilities are governed by the Commonhold Community Statement (which will be fixed by law) and ‘local rules’ (which can be set by each property’s commonhold association).  In this way, the government hopes that commonhold will create a “democratic framework for shared living” without the unfairness often associated with the landlord and tenant relationship. 

What reforms are being proposed?

Commonhold was first introduced in 2004 but to date, has been adopted by less than 20 developments in the country.  The White Paper is designed to reinvigorate commonhold by fixing the legal and practical issues which have limited its uptake. Those reforms can be split into the following categories:

Flexibility in commonholds

• Commonhold developments will be capable of division into separate ‘sections’ to separate out the management of different areas or groups of units. This will enable more flexibility in larger developments where services and costs are allocated differently across separate buildings.
• Commonhold will be opened up to key homeownership products, including shared ownership and home purchase plans. It is intended that this will expand commonhold to a wider range of consumers.
• Developers will be permitted to reserve key development rights throughout the lifecycle of a development, adding greater flexibility to phased commonhold developments. 

Living in commonholds

• The voting threshold required to change the local rules of a commonhold will be increased to 75% of unit owners, up from 50%. This increased voting threshold is intended to avoid dissatisfaction and disputes amongst commonhold owners.
• Commonhold associations will have the right to create rules to restrict certain short-term uses of properties, such as Airbnb.
• Commonhold budgets will be subject to a yearly vote, requiring a majority of unit owners to support a budget before it can be passed. In the event that it is not passed, the previous budget will roll over. 
• Commonhold associations will be able to vote on the standard of repair expected from individual unit owners. 
• All commonholds are required to have at least two directors, who will be elected annually. It will be possible for the commonhold association to appoint professional directors.  
• Commonhold associations will be able to take out loans where extra funds are needed for the commonhold, such as for urgent repair works. Commonhold associations will also be able to sell parts of the building to raise those funds, if necessary. Both measures will require the unanimous support of the unit owners.

Resolving disputes and recovering debts in commonholds

• The government will remove unnecessary barriers to resolving disputes between commonhold owners and will promote mediation and other out-of-court methods to resolve disputes. The government will also consider the possibility of introducing an ombudsman for commonhold. 
• Commonhold associations will be given greater powers to enforce any unpaid debts owing from unit owners, including the ability to apply to the court for an order to sell a unit if the owner repeatedly fails to pay their bill. This ability will be subject to a minimum arrears threshold.

What further reforms are needed?

The government has acknowledged that further attention needs to be given to the following key areas before the draft Bill is published:

Converting existing leaseholds to commonhold

• At present, full consent is required from all parties (freeholder, leaseholder(s), and lender(s)) for a leasehold to be converted to commonhold. This can be very difficult to achieve in practice and will likely act as a barrier to conversion to commonhold.
• The government intends to reduce the consent threshold for commonhold conversion to 50%, mirroring the consent threshold required for enfranchisement. However, it acknowledges that this lower threshold may negatively impact non-consenting leaseholders. To alleviate that impact, the government is considering whether to introduce a mandatory leaseback arrangement for non-consenting leaseholders. 
• The government intends to provide further detail of its proposals for converting from leasehold to commonhold in its draft Commonhold Bill later this year.

Making commonhold work for properties of all sizes

• The government has suggested that less onerous requirements may be used for smaller commonholds comprising only 2 or 3 units. Equally, it has been indicated that extra requirements may be imposed for commonhold buildings which are taller than 11 metres. 

Banning the sale of new leasehold flats

• One of the government’s flagship manifesto policies was a ban on the sale of new leasehold flats. The ban is closely linked to the implementation of commonhold, and the government plans to consult on the ban later this year. 

To achieve these additional reforms, the government plans to consult with industry and consumer groups to understand their concerns around commonhold. Whilst all interested parties should be encouraged to engage in this process, it remains to be seen whether the government will be able to produce a system that satisfies the concerns of consumers, developers and lenders. 

The government is determined to ensure that commonhold becomes the default tenure and the publication of this White Paper is a crucial step in realising that objective.

https://www.gov.uk/government/publications/commonhold-white-paper/commonhold-white-paper-the-proposed-new-commonhold-model-for-homeownership-in-england-and-wales