If you’re a leaseholder frustrated with navigating the technicalities of the leasehold system  converting to commonhold could provide greater control and security. This article explains the process under current law, highlights the challenges, and looks ahead to proposed reforms in the Draft Commonhold and Leasehold Reform Bill, published on January 27, 2026. 

What Is Commonhold and Why Convert?

Commonhold is a form of freehold ownership tailored for multi-unit buildings, such as blocks of flats. Each owner holds the freehold title to their individual unit (e.g., a flat) and becomes a member of a commonhold association—a company limited by guarantee that manages shared spaces like hallways, roofs, and gardens.  The association operates democratically: decisions on maintenance, budgets, and rules are made by unit owners, typically through voting based on allocated shares.

Benefits include:

• No Landlord Oversight: Unlike leasehold, there’s no freeholder extracting ground rent or controlling major decisions.
• Perpetual Ownership: Your unit is yours forever, without lease extensions costing thousands.
• Transparency and Fairness: Costs for common areas are shared proportionally, and disputes can be resolved internally or via tribunals.
• Potential Easier Sales: Buyers aren’t deterred by short leases or high ground rents.

Conversion is particularly appealing for existing leasehold blocks where owners want to collective manage their building without a third-party landlord. However, it’s not suitable for all properties—buildings must be self-contained and primarily residential.

The Current Conversion Process: Step-by-Step

Under the existing rules from the 2002 Act, converting a leasehold building to commonhold is complex and requires unanimous agreement, making it rare in practice.  Here’s how it works:

1. Acquire the Freehold (If Needed):

If your building is leasehold, you must first own the freehold. This is done through collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993 (as amended). At least 50% of qualifying leaseholders (those with long leases) must participate, and the building must meet criteria: self-contained with at least two flats, at least two-thirds residential, and no more than 25% non-residential space (soon to be 50% under recent reforms).  Costs include a premium to the freeholder, based on lease lengths and ground rents.

2. Form the Commonhold Association

Establish a company limited by guarantee at Companies House. The company’s name must end with “Commonhold Association Limited,” and it must adopt prescribed articles of association from the Commonhold Regulations 2004. Appoint at least two directors and a secretary—these don’t have to be unit owners initially.

3. Draft the Commonhold Community Statement (CCS)

This is the governing document, similar to a lease but more flexible. It must follow a prescribed format and include:

• Definitions of units and common parts (with plans).
• Allocation percentages for costs and voting rights.
• Rules on maintenance, insurance, reserve funds, leasing restrictions, and dispute resolution. Additional local rules can be added, but they must comply with regulations.

4. Obtain Unanimous Consent (although this may change – see below)

This is the biggest hurdle. You need permission from:

• The freeholder (and any joint owners).
• All leaseholders (including sublessees for leases over 21 years).
• Lenders with mortgages or charges on the property. For short leases (21 years or less), you might not need consent if offering a replacement lease, but a court can waive it if a leaseholder can’t be contacted. Without 100% agreement, conversion fails.

5. Apply to the Land Registry

Submit the application under Section 9 of the 2002 Act (for occupied buildings). Include the CCS, association details, consents, and fees. The Land Registry will:

• Register the commonhold.
• Create freehold titles for each unit in the owners’ names.
• Transfer common parts to the association. Existing leases are extinguished, and owners become association members.

6. Post-Conversion Management

The association takes over, collecting contributions via assessments. Unit owners can sell or mortgage their properties freely, subject to CCS rules.

Costs vary: Freehold acquisition is the main expense (potentially £10,000–£100,000+ per block), plus legal fees for drafting documents (£5,000–£20,000). The process can take 6–18 months.

 
Challenges and Why Conversions Are Rare

The unanimous consent requirement is the primary barrier— even one dissenting leaseholder or lender can block it.  Lenders may hesitate due to unfamiliarity with commonhold mortgages. Additionally, not all buildings qualify; mixed-use or complex structures might need adjustments. As a result currently most conversions never happen, leaving leaseholders stuck in the old system. However this may change with reforms

Upcoming Reforms: A Brighter Future?

The Draft Commonhold and Leasehold Reform Bill, introduced on 27  January 2026, promises to revitalize commonhold.  Key proposals for conversion:

• Lower Consent Threshold: Reduce from 100% to 50% of qualifying leaseholders, aligning with enfranchisement rules.
• Handling Non-Consenting Leaseholders: They remain leaseholders but join the association with voting rights. Their leases align with the CCS, and over time, residual leases phase out—e.g., upon sale or extension, they must convert to commonhold.
• Ban on New Leasehold Flats: From implementation, new flats must be commonhold, potentially boosting familiarity and lender confidence.
• Other Supports: Simplified registration, better dispute mechanisms, and caps on ground rents (£250/year) for existing leases.

These changes could make conversion feasible for thousands of blocks. However, as it’s a draft bill, it must pass Parliament—implementation might take 1–2 years.

Final Thoughts

Converting to commonhold can empower leaseholders with true ownership and collective control, but under the current regime it is difficult to obtain. Until the Reforms are passed (if at all) collective enfranchisement to buy the freehold under LHRUDA 1993 is the only real viable option. See here for more detail on procedure and costs on this process – https://comptons.co.uk/services/leasehold-property/collective-enfranchisement/

Please do not hesitate to reach out to us at advice@comptons.co.uk for further information on commonhold or call us on 020 7485 0888.