Commonhold White Paper: The proposed new commonhold model for homeownership in England and Wales

An Alternative to Leasehold Ownership

On 3 March 2025 the government issued the Commonhold White Paper (the “White Paper”) promoting reformation of the existing leasehold system in England and Wales in favour of commonhold ownership. 

Although no specific plans have been outlined for the conversion of the existing system, the proposal promotes an outright ban on future leasehold property, and further legislative amendments to make it easier to convert an existing leasehold building to commonhold. It is expected that the draft Leasehold and Commonhold Reform Bill will be published this year based on the Law Commission’s report published 21 July 2020.

Under the current ownership structure for multi-occupancy developments, the freeholders own the building whilst the leaseholder purchases, in effect, a right to occupy a given area for a fixed term. 

First introduced by the Commonhold and Leasehold Reform Act 2002, commonhold is an alternative leasehold tenure which allows for individual units within a building to be owned on a freehold basis. When purchasing a property in a commonhold, each proprietor owns the unit they occupy, whilst taking a share in the freehold and becoming a member of the commonhold association (a company limited by guarantee). Each member is therefore able to vote on various decisions relating to the commonhold.

A Review of Commonhold Tenure

There are many arguments presented in the White Paper for the abolition of the existing system. The proposal is underpinned by the government’s commitment to “providing leaseholders with greater rights, powers and protection over their homes”.

It is suggested that the model provides a more suitable option in a wider range of settings with the abolition of lease expiration. This is most transparent in mixed-use multi-occupancy developments as the system seeks to promote a democratic approach to the overall management of the building and costs distribution. This is in direct contrast with the current position whereby management of the freehold is often left to a third-party.

From a developer’s point of view, it is argued that commonhold property will facilitate housing development by increasing the pool of potential homebuyers through shared ownership schemes, whilst offering potential homebuyers a better opportunity to own their home.

The government recognises the monumental challenges ahead of their proposal to implement commonhold ownership and these are expected to be addressed in the draft Bill.

The greatest challenge will be the implementation of the forced conversion of existing leasehold system into commonhold. The transfer of power from a landlord, to a commonhold association, would force landlord’s to relinquish ownership of the freehold which is a serious interference with the basic tenets of contract law. A wider issue of the proposals will be the potential adverse financial impact on the landlords who, as investors, base their business on the receipt of ground rent.

Conclusion

The publication of the White Paper is a major milestone for the movement away from the traditional leasehold, to commonhold tenure. The White Paper deals extensively with the benefits of default commonhold tenure including greater power and protection for homeowners. However, although the White Paper presents commonhold tenure as the “preferred alternative” there are significant issues the government will need to address in the draft bill. And yet whilst the argument for commonhold tenure is strong, there is a significant weight of opinion that further leasehold reform would be the better alternative.