The End of Leasehold? What does commonhold actually mean for leaseholders?

By Vision Finance
July 2026

For centuries, leasehold has been the foundation of flat ownership in England and Wales. It has shaped everything from how apartment blocks are managed to how millions of homeowners pay for the upkeep of their buildings. Now, that centuries-old system is facing its biggest challenge yet.

The Government has made clear its ambition to consign leasehold to history, replacing it with commonhold as the standard form of ownership for new flats. It is a reform that ministers believe will give homeowners greater control over the buildings they live in, end the payment of ground rent to third-party landlords and create a fairer housing market.

Few would dispute that leasehold has become increasingly controversial. High-profile cases involving escalating ground rents, opaque service charges and expensive lease extensions have damaged confidence in the system, while campaigners have long argued that England and Wales have become an international outlier by continuing to rely on a form of home ownership that separates ownership of a flat from ownership of the building itself.

Yet while the political direction of travel is clear, replacing leasehold with commonhold is far from straightforward. Reforming the legal framework is one challenge; changing decades of industry practice, lender requirements and consumer understanding is another entirely.

A system rooted in history

Leasehold has its origins in England’s feudal land system, where ownership of land and the right to occupy it were deliberately separated. Although today’s legal framework bears little resemblance to its medieval predecessor, the basic principle remains unchanged: a leaseholder owns the right to occupy a property for a fixed period, while the freeholder owns the land and building.

For many homeowners, this distinction has little day-to-day impact. However, leaseholders are typically responsible for paying service charges towards the maintenance of communal areas and, depending on the terms of their lease, may also pay ground rent to the freeholder. Alterations, subletting or even keeping pets can require the freeholder’s consent, and once a lease begins to shorten it can become increasingly expensive to extend.

It is these features, rather than leasehold itself, that have driven much of the recent criticism.

Reform has already begun

The process of modernising leasehold has not started with the latest proposals. In 2022, the Leasehold Reform (Ground Rent) Act effectively abolished ground rents on most new residential leases by reducing them to a peppercorn.

The following year, the Leasehold and Freehold Reform Act 2024 introduced a further package of reforms designed to make it easier and cheaper for leaseholders to extend their leases or purchase their freehold, while strengthening consumer protections. However, many of those provisions still require secondary legislation before they take full effect.

The Government’s latest proposals go considerably further.

The draft Commonhold and Leasehold Reform Bill would make commonhold the default form of ownership for new flats, introduce a £250 cap on existing residential ground rents before reducing them to a peppercorn after 40 years, abolish residential leasehold forfeiture and establish a new legal framework for commonhold developments.

Taken together, these measures represent the most significant overhaul of residential property ownership for generations.

What exactly is commonhold?

Although often described as a new system, commonhold has existed in English law since 2004. The reality is that it has never gained widespread acceptance.

Unlike leasehold, commonhold allows owners to own the freehold of their individual property indefinitely while collectively owning and managing the shared parts of the building through a commonhold association. There is no external freeholder, no diminishing lease term and no ground rent.

The concept is hardly unusual internationally. Comparable systems operate successfully in countries including Australia, New Zealand, Canada and the United States, where apartment owners routinely manage their buildings through collective ownership structures.

The challenge has never been whether commonhold can work—it clearly can—but whether England’s property market is prepared to adopt it on a large scale.

A cultural shift for homeowners

One of the most significant changes will not be legal but behavioural.

Under leasehold, responsibility for major decisions often rests with the freeholder or its managing agent. Under commonhold, those responsibilities transfer to the homeowners themselves.

Residents will collectively decide how their building is managed, how much money should be set aside for future repairs and when major works should be undertaken. Many developments will continue to appoint professional managing agents, but ultimate responsibility will sit with the owners.

Supporters see this as empowering. Critics point out that collective decision-making can be difficult, particularly where residents disagree over expenditure or fail to contribute to reserve funds.

Experience from overseas suggests both perspectives have merit. Well-managed commonhold-style developments can perform exceptionally well, while poorly governed buildings can struggle with underinvestment and disputes between owners.

In other words, commonhold removes the landlord—but it does not remove the challenges of managing shared buildings.

The greatest challenge lies with existing leasehold flats

While the proposed ban on new leasehold flats is significant, it is arguably the easier part of the reform programme.

Far more complex is the question of England’s estimated five million existing leasehold properties.

Converting an established leasehold block into commonhold is not simply an administrative exercise. It requires agreement between leaseholders, freeholders, mortgage lenders and, in many cases, commercial interests with significant financial investments in the building. Questions around valuation, compensation, governance and legal rights remain among the most contentious aspects of the Government’s proposals.

It is therefore unlikely that leasehold will disappear overnight. Existing leasehold homes are expected to remain a substantial part of the housing market for many years, even if commonhold becomes the standard for future developments.

What does this mean for buyers and sellers?

For buyers, the immediate position remains largely unchanged. Leasehold flats continue to be bought and sold every day, and careful due diligence remains essential. Lease length, service charges, reserve funds, management arrangements and any building safety issues should all continue to form part of the conveyancing process.

Sellers should also recognise that purchasers and lenders are becoming increasingly aware of leasehold issues. Short leases, onerous ground rent provisions and poorly managed buildings may attract greater scrutiny than ever before.

Developers, meanwhile, are likely to face the biggest operational changes. Delivering commonhold developments will require new documentation, revised funding arrangements and greater engagement with lenders, conveyancers and managing agents to ensure the new model functions effectively from day one.

Looking ahead

There is now broad political consensus that leasehold requires fundamental reform, even if views differ on the pace and detail of implementation.

The direction of travel appears clear: future flat ownership in England and Wales is likely to look very different from the system that has existed for generations.

Whether commonhold ultimately succeeds, however, will depend on far more than legislation alone. It will require confidence from mortgage lenders, support from developers, effective professional management and, perhaps most importantly, homeowners who are willing to take an active role in managing the buildings they collectively own.

Leasehold may well be approaching the end of its dominance, but the transition to commonhold is likely to be measured rather than immediate. For property professionals, buyers and investors alike, understanding that distinction will be essential as one of the most significant reforms to residential property ownership in decades continues to unfold.