What is the Definition of Commonhold?

According to the UK Government, ‘Commonhold ownership allows people to fully own their property outright, with no expiring term or need to save to extend a lease’. Once it is enacted in England and Wales, leasehold flats will eventually be eliminated, and the new ownership model for apartments will be freehold. This initiative surpasses the leasehold reform legislation passed in May 2024, which provided new apartment owners with 990-year leases.

Future apartments and houses will be offered as freehold properties. In contrast to leasehold, where ownership is limited by time and subject to the control of a landlord, commonhold allows apartment owners to retain their property indefinitely. Owners will also collectively manage shared areas such as the building, grounds, gardens, hallways, and roofs through a Commonhold Association.

The Commonhold Association will be responsible for determining the allocation of costs, although certain expenses will be obligatory, including indemnity insurance, public liability insurance, and buildings insurance.

Is Commonhold Better Than Leasehold?

Many property owners and investors argue that commonhold is a superior form of ownership compared to leasehold. Here’s why:

• Full Ownership: Buyers will own their apartment freehold, eliminating the need to extend leases.

• Lower Costs: No expensive lease extension or marriage value fees.

• Greater Control: Apartment owners collectively manage the building, reducing issues with excessive service charges.

• More Attractive to Lenders: Mortgage lenders may be more willing to finance freehold apartments.

However, there are problems with commonhold, such as the challenge of managing the Commonhold Association effectively and ensuring that all owners contribute fairly to maintenance costs.

Is Commonhold the Same as Share of Freehold?

Not exactly. In a share of freehold arrangement, leaseholders collectively own the freehold, but leases still exist. In contrast, commonhold eliminates leasehold altogether, providing direct freehold ownership of each apartment.

What Are the Advantages and Disadvantages of Commonhold?

Advantages of Commonhold are –

• Ownership Security: Owners hold their property indefinitely without lease renewal concerns.

• Transparent Costs: No ground rent or lease extension fees.

• Better Mortgage Opportunities: Freehold status makes properties more attractive to lenders.

• Self-Governance: Apartment owners collectively manage the property, eliminating the need for third-party freeholders.

• No Leasehold Exploitation: Owners avoid hidden charges from freeholders and management companies.

Problems with Commonhold are –

• Complex Management: Apartment owners must actively participate in property maintenance decisions.

• Potential Disputes: Disagreements among owners on repairs and budgets can arise.

• Lender Hesitation: Some mortgage providers may take time to adjust to this new ownership model.

• Complex Transition: Converting existing leasehold properties to commonhold could be legally and administratively challenging.

The Commonhold White Paper and Upcoming Legislation

The Commonhold White Paper was published on March 3, 2025, detailing how commonhold will become the default tenure. Although not yet law, the government’s commitment suggests that developers must prepare for this shift.

How Will Commonhold Affect Property Owners and Developers?

• Apartment Buyers – Future apartment owners will benefit from full ownership, mortgage-friendly properties, and lower maintenance costs. The elimination of lease extensions makes commonhold more financially appealing.

• Landlords with Multi-Unit Freehold Blocks – Landlords owning entire freehold blocks will remain unaffected unless they choose to title split and create individual freehold apartments. Title splitting allows them to sell each unit separately, increasing capital uplift by 25-35% and cashflow by 60%.

• Developers – Developers will need to build and sell freehold apartments instead of leasehold ones. They must also establish a commonhold association to manage communal areas.

What is the Opportunity in knowing how to Title Split Blocks?

Commonhold is a great opportunity for developers and landlords who want to retain apartments for buy to let rental, serviced accommodation and social housing projects. Title splitting freehold apartments will follow a similar procedure as title splitting leasehold apartments. It is merely an adjustment to the legal framework in use. As title splitters, we will continue to create beautiful residences for our tenants, while also unlocking opportunities for capital growth by dividing them into individual, sellable units. Additionally, a benefit for title splitters is that you will now have access to improved valuations in the future, as your apartments will now be freehold, which banks will favor. Consequently, there are not many disadvantages, except for current freeholders regarding the recent legal changes.

The transition from leasehold to commonhold represents a major shift in UK property law. While there are some advantages and disadvantages of commonhold, it ultimately empowers homeowners and enhances property investment opportunities. As commonhold becomes the norm, property owners, landlords, and developers must adapt to this new framework.

If you want to stay ahead of the curve and learn more about title splitting, capital uplift, and maximizing your returns, get in touch with us today!

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