A recent analysis by Property118 has drawn a direct comparison between leasehold and commonhold, spotlighting commonhold as an alternative form of property ownership in England and Wales. While leasehold remains the predominant structure for flats, commonhold offers a different model where individual apartment owners collectively own and manage the common parts of their building, such as hallways, roofs, and foundations.
Under the traditional leasehold system, a flat owner buys the right to occupy a property for a fixed period, typically 99 or 125 years, but does not own the land or the common parts of the building. Instead, these are owned by a freeholder, to whom the leaseholder pays ground rent and service charges. This structure has often led to disputes over escalating costs, opaque service charges, and limited control for leaseholders over decisions affecting their homes.
Commonhold, introduced in England and Wales by the Commonhold and Leasehold Reform Act 2002, aims to address many of these issues. In a commonhold development, each flat owner owns their individual unit outright (freehold) and also becomes a member of a commonhold association. This association, run by the residents themselves, is responsible for the management, maintenance, and repair of the building's common parts. This structure provides a greater degree of control and transparency for residents compared to the leasehold model.
Despite being available for over two decades, commonhold has seen limited uptake in the UK property market. Experts attribute this to a combination of factors, including a lack of awareness among developers and homebuyers, and the complexity involved in converting existing leasehold properties to commonhold. However, with ongoing government efforts to reform the leasehold system and address its perceived unfairness, commonhold is increasingly being discussed as a viable and fairer alternative for future developments.
The government has expressed a commitment to improving the leasehold system, with potential reforms including making it easier and cheaper for leaseholders to extend their leases or buy their freeholds. The long-term vision for some policymakers is to eventually phase out leasehold in favour of commonhold, particularly for new build flats, offering a more equitable and transparent ownership model for apartment dwellers across the country.