Big changes are on the horizon for flat ownership in the UK and if you're a leaseholder, landlord, or property investor, you'll want to keep a close eye on what happens next.
The government has announced that it's planning a major reform of the current leasehold system. While details are still emerging, the key message is clear: they want to move towards a new model called ‘Commonhold’. So, what does that actually mean - and how could it impact you?
First, what’s the current system?
Right now, most flats in the UK are sold on a leasehold basis. This means:
- A developer builds a block of flats and sells long leases (usually between 99 and 999 years) to individual buyers.
- The land and building are owned by a freeholder.
- Leaseholders must follow the rules in their lease and pay a service charge for maintenance of the communal areas.
- In older leases, ground rent was also payable - but that’s now been phased out for new leases.
The freeholder retains decision-making power over major works, like roof repairs or structural updates, which the leaseholders have to fund. And when your lease starts to run down (usually under 80 years), you’re often advised to extend it, which is a costly and complex process.
What is Commonhold?
Under the proposed reforms, leasehold could be replaced with Commonhold - a system that removes the idea of a freeholder altogether.
Instead, the land and building are owned by a Commonhold Association, made up of all the flat owners. Each owner has a freehold interest in their own unit, and a shared responsibility for the common areas.
Here’s what is expected to change under Commonhold:
- Your ownership never expires - no lease extensions needed
- You get a real say in how the building is managed and maintained
- All owners share in decisions and costs through a democratic process
- A Commonhold Community Statement sets out the building’s rules
Sounds great - what’s the catch?
Commonhold offers more control and security for flat owners, but it does come with responsibility.
Managing a block of flats - budgets, maintenance, contractors - takes time and expertise. While owners can appoint a professional managing agent, the decisions ultimately rest with the Commonhold Association.
In short: it’s more democratic, but it still needs good management.
Will this affect existing leaseholders?
That’s the big unknown. While it’s expected that new developments will be required to adopt the Commonhold model, it’s less clear how - or if - existing leasehold buildings will be converted.
There’s significant resistance from current freeholders, who could stand to lose substantial value if forced to give up their interests. So, for now, it looks like the government will push Commonhold for future developments first.
Why it matters?
For leaseholders, this reform could mean:
- No more expensive lease extensions
- A clearer structure for managing your building
- Greater involvement in how your money is spent
But as always, the success of the system will depend on effective property management, and that’s where expert support becomes essential.
At Rocket Property Management, we’ll be keeping a close eye on the rollout of Commonhold - and helping our clients navigate what it means for their properties.
If you're unsure how these changes might impact you, or you're dealing with leasehold challenges now, don’t hesitate to get in touch.
