On 3rd March 2025, The Government announced the Commonhold White Paper, which proposes massive changes for future flat owners.
But what exactly are these changes? What are the benefits? And how will you be affected?
In this article, Leasehold Property Expert Niki Adkins outlines exactly what these changes are and what they mean for you.
Are leasehold flats being banned?
The Commonhold White Paper looks to compliment the new Leasehold and Freehold Reform Act 2024 in providing future leaseholders with greater control, rights, and protection over their property.
Currently, leaseholders struggle with issues such as:
- Escalating ground rents,
- Expensive charges for services such as maintenance and admin,
- Having little control over decisions in the building, and
- Depreciating leases, causing high premiums for lease extension.
The White Paper is intended to address the issues that leaseholders currently face by replacing the leasehold system with a commonhold system for new leases. This change will therefore not affect current leasehold properties.
It remains to be seen how easy it will be to convert leasehold property to commonhold.
Related: How to deal with high ground rent
When are leasehold properties being abolished?
It is difficult to predict when the White Paper will receive Royal Assent and become law, and whether any changes will be made to the proposed legislation before then.
There are a lot of areas within the proposal that still need to be ironed out, so it may well be a few years before this leasehold ban takes effect.
Again, things are still uncertain.
How will commonhold work?
Commonhold is a form of freehold ownership that allows people to own their flat outright and have a share in, and responsibility over, the communal areas.
In commonhold properties, there is a document, known as the Commonhold Community Statement, that outlines all of the flat owner rules, responsibilities and obligations.
What is the difference between leasehold and commonhold?
The main difference between leasehold and commonhold property is that, unlike leaseholders, flat owners in a commonhold own the property outright with no expiring date.
In addition, in commonhold properties, communal areas are jointly owned by the flat owners whereas, in leasehold property, the freeholder will own those areas and have a say in their management.
Do commonhold properties have ground rent?
Ground rent is a regular payment that a leaseholder might have to pay their freeholder each month for living in their property.
In commonhold properties, there is no lease or a freeholder, so no ground rent will be payable.
In June 2022, Ground Rent was abolished for new properties. You can find out more about this change here.
What does the commonhold whitepaper mean for leaseholders?
Unfortunately, the new commonhold white paper won’t have much of an affect on current leaseholders, as it only applies to new properties.
What does the commonhold whitepaper mean for new leaseholders?
If the White Paper receives Royal Assent, buyers will be able to purchase commonhold properties, and reap the benefits.
What are the advantages of commonhold?
Aside from the increased control that flat owners will have over their property, commonhold ownership has some additional benefits.
In theory, the change to commonhold is supposed to make it easier for buyers to get a loan for their purchase, as lenders will have greater security.
However, it may take some time for mortgage lenders’ attitudes to change and warm to commonhold properties, something that didn’t happen when it was introduced for the first time in 2002.
Furthermore, in commonhold property, flat owners will have greater flexibility; for example if the flat owners want to bring the commonhold arrangement to an end or make amendments to the Commonhold Community Statement with a majority vote.
What are the disadvantages of a commonhold?
Although this greater flexibility to make changes may benefit commonholders, it might also lead to more disputes arising.
In general, disputes between commonholders may be more prominent, as the blocks will be self-managed and potentially more likely to fall into disrepair if owners are reluctant to spend money on upkeep.
If you’re involved in a dispute of any kind, our specialist Dispute Resolution Team would be happy to help you and provide some legal advice. You can call us on 01202 499255, or fill out the form at the top of this page, for a free initial chat.
How to convert leasehold to commonhold?
Currently, leaseholders can convert their property to commonhold if all the parties with an interest in the block agree (i.e. all leaseholders, the freeholder, and every lender). However, gaining approval from every party involved is probably unlikely in most situations.
If a conversion is agreed to, freeholders will likely want to be compensated for giving up their interest and leaseholders would need to ‘buy out’ their lease, which can be very costly.
Therefore, its probably easier to go down the Enfranchisement or Right to Manage route.
Find out the difference between Enfranchisement and the Right to Manage, and which is best, here.
Commonhold White Paper: A Solicitor’s View
Niki Adkins, Partner and Head of Leasehold Property at Frettens, says: “There are significant changes that need to be added to the proposed legislation to make commonhold more attractive and easier to convert to.
Until these measures are in place, existing leaseholders will continue to operate in the same way they have been for many years.
If and when the white paper does become law, current leaseholders will surely be thrilled that they no longer have to worry about lease extensions, ground rent and everything else that comes with owning leasehold property!”
Update: Two-year rule removed for lease extensions
Update: Leasehold Reform Act likely to be delayed
Specialist Leasehold and Commonhold Solicitors
Our bright Leasehold Property department is one of the largest and most experienced in the region, specialising in multiple areas of leasehold and commonhold law.
We would be happy to answer any questions you might have on the leasehold or commonhold system, or assist you with lease extension, conversion, enfranchisement or attaining the right to manage.
You can call us on 01202 499255, or fill out the form at the top of this page, for a free initial chat.
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