A direct comparison between leasehold and commonhold
by Mari Knowles
12:01 AM, 21st May 2026, 2 weeks ago
17
Categories:
Commonhold is an alternative form of property ownership to freehold and leasehold. Whilst commonhold has existed since 2002, it has proved to be hugely unpopular, with only 20 commonhold buildings currently existing in England and Wales.
Perhaps the greatest issue with commonhold, however, is a lack of understanding.
Not all mortgage lenders, for example, will currently lend on commonhold, which can make commonhold unattractive to potential buyers, but as knowledge and understanding increase, this reluctance to accept commonhold will invariably dissipate.
The government’s ambitious plan is to move away from leasehold, making commonhold the default tenure through the introduction of the Commonhold and Leasehold Reform Bill later this year.
The Housing Minister, Matthew Pennycook, however, made it clear in a speech on 29 April that existing leasehold flat owners will not be forced to convert to commonhold, although they will be encouraged to do so where possible.
Leasehold vs commonhold
As for a comparison between the two, the leasehold system is hierarchical; the whole building is owned by a freeholder who then leases, or grants a right to use, individual flats inside the building to a leaseholder.
Each flat has its own lease, which sets out the terms of its occupation. This often includes a requirement to pay ground rents to the freeholder.
The freeholder is often a third party unconnected with the leaseholders, such as an investor or developer.
It is, however, possible for leaseholders to buy their freehold from their freeholder, a process called enfranchisement.
A lease is also what is known as a depreciating asset, because the lease is granted for a fixed number of years.
Therefore, as the lease gets shorter, the flat becomes less valuable.
In some cases, it is possible to extend the lease via a lease extension.
What is commonhold?
The commonhold system is structured differently.
The Commonhold Association, a company owned by the building’s occupants, owns the freehold of the common parts.
Individual units are owned by individual commonholders, under a freehold, not leasehold, tenure. Instead of each unit having a lease, there is one legal document for the whole building, the commonhold community statement.
As there is no lease, a commonhold unit is not a depreciating asset in the way that a leasehold unit is.
Similarities between them
Whilst the two forms of tenure are structured differently, there are several similarities: the building still needs to be maintained, repaired and insured by the freeholder or commonhold association, and the occupants are required to contribute towards the costs of those obligations.
Similarly, both leases and commonhold community statements will typically contain restrictions on how units can be used, such as requirements to obtain consent before carrying out alterations.
Both forms of tenure put in place mandatory sales procedures for when a unit is sold.
Both will therefore have a list of fundamental rights and obligations, which are not tenure specific.
But this is where the similarities stop: the different legal frameworks result in key differences in how rights and obligations are managed in practice.
Take for example, the case of major works being required. In leasehold, there is a prescriptive statutory process involving the service of Section 20 notices.
If there is no reserve fund (a pot of money which leaseholders pay into over a long period of time to pay for one off major works), leaseholders will receive a major works bill, which can be substantial.
The process and the works themselves can be challenged by the leaseholders via the tribunal.
Commonhold associations
By comparison, all commonhold associations must have a 10-year building report which identifies works needed over the course of the next 10 years.
The commonhold associations must hold a reserve fund to pay for the works identified in the building report.
When major works are needed, commonholders will usually be of the upcoming cost and the reserve fund should contain the funds needed to pay for the works.
As a result, the process should feel different from the current leasehold system.
Instead of relying on a formal notice procedure when major works are proposed, commonhold places greater emphasis on forward planning, transparency and collective budgeting through the commonhold association.
The aim is that major works are anticipated, costed and funded over time, rather than dealt with only when they become urgent.
Overall, commonhold affords homeowners autonomy over their building.
For those who are put off from being leasehold because of the lack of control, this can be an attractive prospect.
Which is better?
Professionals are often asked if they think commonhold or leasehold is better.
Currently, there are too few commonholds in existence to answer this question.
Theoretically, if a homeowner seeks autonomy, a more transparent system and fewer regulations, then commonhold is undoubtedly the better model.
Not all homeowners crave autonomy, however, and may prefer the certainty of leasehold.
Time will tell if the government is right in believing commonhold to be the better tenure.
Mari Knowles is a solicitor at Commonhold and Leasehold Experts Limited and a member of ALEP (the Association of Leasehold Enfranchisement Practitioners)
Tags:
commonhold and leasehold reform bill, Commonhold association, commonhold reform, Ground rent reform, leasehold flat owners, Leasehold vs commonhold, Mari Knowles
Comments
Have Your Say
Every day, landlords who want to influence policy and share real-world experience add their voice here. Your perspective helps keep the debate balanced.
Not a member yet? Join In Seconds
Login with
or
Previous Article
£££ CASHFLOW £££Next Article
Collapsed house moves cost the UK £2bn
Member Since October 2022 - Comments: 423
10:41 AM, 21st May 2026, About 2 weeks ago
Would have been useful to compare and contrast with share of freehold interest held in a registered limited company with Deeds of Trust held by leaseholders who are shareholders under company Articles and as lessees under terms of their individual leasehold ownership
Member Since January 2015 - Comments: 1493 - Articles: 1
10:53 AM, 21st May 2026, About 2 weeks ago
Commonhold is not all it or the government cracks it up to be.
Where a Leasehold flats are owned as the joint freeholders of a building the “management” can use a s20 opt -out agreement to raise/bill leaseholders (ie the joint freeholders) for major building works that the maintenance fund is not enough for.
This is beneficial in that monthly maintenance charges per flat are much less, but true the Leaseholders/joint freeholders need to have monies in readiness/savings to pay for major/large works.
Upping the monthlies to cover future works could well see some Leaseholders decide to move and purchase freehold properties to live in or to rent out.
Member Since October 2024 - Comments: 20
11:02 AM, 21st May 2026, About 2 weeks ago
Commonhold is the usual form of property ownership for units/flats/condominiums in South Africa and Southern Africa. There they call it sectional title. The owner owns the freehold of the unit and an undivided share of the common property. Each owner is responsible for tge upkeep of their unit and pay a monthly levy towards the upkeep of the common property, repairs to the common property, maintenance of gardens and swimming pools, and property rates (Council tax). The unit holders are members of the body corporate (owners association) and have a yearly AGM and usually a monthly meeting to keep on top of things. They elect a property maintenance company to handle the maintenance tasks and daily upkeep where necessary, and can change them if they fail to deliver, or become too expensive. The owners themselves can elect to do the job of the property company if they choose to. The maintenance company has to keep a reserve fund for capital works like occasional exterior painting, roof repairs, and anything not covered by general maintenance. The reserve fund is invested and is jointly owned by the owners, and each owner has a vote in the yearly AGM and monthly meetings, and for any extraordinary decision making. The body corporate can also take legal action on any owners who default on monthly payments or break the body corporate rules.The system works extraordinary well, and is far better than the UK’s leasehold, in that the property values depreciation is not caused by a diminishing lease, and the owners are in charge of the appointment and employment of the maintenance company who looks after their property block. Tgey can change the company if they choose, or it fails to live up to expectation.
Member Since October 2024 - Comments: 20
11:09 AM, 21st May 2026, About 2 weeks ago
Reply to the comment left by Judith Wordsworth at 21/05/2026 – 10:53
I disagree. The owners are, or should be, in charge of the maintenance company. It’s in all owners interest that the common property maintenance is being done correctly as it protects their investment. They are also in charge of their own destiny, and are not at the mercy of leaseholders or unscrupulous maintenance companies, as they are the ones who appoint them. This system works perfectly well in South Africa. I will never now own a leasehold property in the UK because it’s an archaic expensive system.
Member Since October 2024 - Comments: 20
11:17 AM, 21st May 2026, About 2 weeks ago
Reply to the comment left by Kizzie at 10:41
This was the old system of unit ownership in South Africa. It has since been replaced by a freehold system where each owner owns their freehold and an undivided ‘share of the common property’. The new system is preferable IMHO to the previous company sharehold system. In the shareholder system the company owns the building in it’s entirety, and the owners have the right of use to the property through their share ownership
Member Since October 2024 - Comments: 20
11:22 AM, 21st May 2026, About 2 weeks ago
This was the old system of unit ownership in South Africa. It has since been replaced by a freehold system where each owner owns their freehold and an undivided ‘share of the common property’. The new system is preferable IMHO to the previous company sharehold system. In the shareholder system the company owns the building in it’s entirety, and the owners have the right of use to the property through their share ownership
Member Since October 2013 - Comments: 1657 - Articles: 3
11:51 AM, 21st May 2026, About 2 weeks ago
Reply to the comment left by Frank URQUHART at 11:02
As a past SoF company secretary, I would say it is very similar to Commonhold in terms of owners’ responsibilities. For many years they managed the block themselves through 4 directors, but over the latter years, the owners become older and infirm, and there was a lack of management volunteers. Also, the regulatory burden started to increase, and as lay persons, we were opening ourselves to significant personal liabilities. I decided to go to tender for a professional management agent, which was the best move ever. They were local, knew how to manage the regulatory burden, and had professional money management facilities (we’d had problems with non-payers and it was emotionally difficult trying to force someone with serious health problems, and who we knew personally, to pay up). But they were under our control and we were signatories to ‘our’ bank account. Transparency and accountability; two qualities sadly missing from so many of today’s managing agents.
Member Since October 2024 - Comments: 20
2:20 PM, 21st May 2026, About 2 weeks ago
Reply to the comment left by Frank URQUHART at 21/05/2026 – 11:02
Share of the Freehold and Commonhold are two names for the same thing as far as I am aware. I could be wrong, as British property rights are archaic. Leasehold is a different kettle of fish entirely. Owner management of a block is seldom a good idea for all the reasons you state and more. But having a direct say in who you appoint to manage the block, and in the way the owners want it run is something leaseholders cannot do.
Member Since December 2024 - Comments: 67
12:36 PM, 22nd May 2026, About 2 weeks ago
Reply to the comment left by Frank URQUHART at 21/05/2026 – 14:20
I believe in USA they also have a similar system to the South African sectional title where everyone belongs to a Homeowners Association (HOA) when living in a shared building.
In theory, it makes sense for the owners of individual units to have a say and control over their own block. I think in the UK it will take time for this to catch on as people here have been used to living under a feudal lord for centuries. It is patriarchal in nature where a father figure looks after his children. Just as the children never have to worry about looking after anything, so leaseholders have never had responsibility for their own block. Will they be able to step up?
In my experience, leaseholders only want responsibility for their own flat and are not willing to get involved with the common areas or common interests. And when they do, they are often at loggerheads with their fellow leaseholders because a decision that suits one person may not suit the other, especially when it comes to money and how much should be spent on the place.
That is why the lenders in the UK prefer the feudal regime as it creates certainty as to who has ultimate responsibility for the block. Where responsibility is divided it creates uncertainty and markets don’t like that.
So, for commonhold to catch on, it is going to take a cultural shift from all parties concerned because unwinding centuries’ old practice is no easy task.
Member Since October 2022 - Comments: 423
2:24 PM, 22nd May 2026, About 2 weeks ago
Reply Robin Wilson
Agree with all that, and with share of freehold interest the complexity of company law.
We haven’t had a revolution to sweep away this feudal system introduced by William the Conqueror whose supporters still own the land handed to them after assessment by Domesday book because of prima geniture. The Normans knew what they were doing.