Commonhold vs leasehold: what's actually different

If you own a flat in England or Wales, you almost certainly own it as a leasehold. Commonhold — a different way of owning a flat, without a landlord or a ticking clock on your ownership — has existed in law since 2002 but has barely been used. That is about to change. The government's draft Commonhold and Leasehold Reform Bill, published 27 January 2026, aims to make commonhold the default tenure for new flats and to give existing leaseholders a real route to convert (GOV.UK). Here's what actually changes between the two systems.

Leasehold: you own a lease, not the building

When you "buy" a leasehold flat, you're really buying the right to live in it for a fixed number of years — the length of your lease, commonly 99, 125 or 999 years. A freeholder (sometimes called a landlord) owns the building and the land it sits on. You pay them, or a managing agent acting for them, service charges to cover the upkeep of shared areas — the roof, lifts, communal gardens, buildings insurance. Many leases also require a ground rent, a separate payment for nothing more than the right to occupy the flat, historically small but on some leases rising sharply over time.

Two structural problems flow from this. First, your lease is a depreciating asset: the number of years remaining falls every year, and once it drops below about 80 years, extending it becomes markedly more expensive, and mortgage lenders start getting nervous about lending against short leases. Second, until 2024 leaseholders could lose their entire home and the equity in it through forfeiture — a landlord's ability to end the lease over a relatively small unpaid debt, sometimes as little as a few hundred pounds. The government's draft Bill proposes to abolish forfeiture entirely and replace it with a proportionate court-supervised enforcement process (GOV.UK).

Leaseholders do have some control today. Many buildings now have a Right to Manage (RTM) company or a Resident Management Company (RMC) that takes day-to-day management away from the freeholder without needing to buy the building outright. But the freeholder still legally owns the block, and major decisions — and any residual value in the ground rent — sit with them, not you.

Commonhold: you own your flat outright, forever

Under commonhold, there is no landlord and no lease running down. Each flat owner holds their unit as a freehold-equivalent interest — permanent, not time-limited. The building's common parts (stairwells, roof, gardens, lifts) are owned and managed collectively through a commonhold association, a company in which every unit owner is automatically a member and has a vote. There's no ground rent, because there's no landlord to pay one to, and there's no forfeiture, because there's no lease to forfeit (BBC News).

Practically, that means the people who live in the building set the service charge budget, choose (and can sack) the managing agent, and decide on major works — decisions currently made by, or requiring the sign-off of, a freeholder. The Housing Minister has described commonhold as removing the risk that "the system perpetuates itself" and giving leaseholders the ability to "gain control of their buildings and exit the system if, and when, they choose to do so" (Housing Minister speech, GOV.UK, 29 April 2026).

The practical differences, side by side

• Service charge control: Leasehold — set by the freeholder or their agent, though the RTM/RMC route gives leaseholders more say. Commonhold — set directly by the unit owners through the commonhold association's budget vote.
• Selling and mortgaging: Leasehold — buyers and lenders scrutinise remaining lease length, ground rent terms and service charge history; short or onerous leases can stall a sale. Commonhold — no lease to run down, so this specific complication disappears (though lender familiarity with commonhold is still developing, which the draft Bill aims to fix).
• Extending vs owning outright: Leaseholders periodically have to extend their lease (at a cost) to keep it mortgageable and valuable. Commonhold owners don't extend anything — the interest doesn't expire.
• Forfeiture risk: Real under existing leasehold law, though due for abolition and replacement under the draft Bill. Not applicable under commonhold, because there's no lease.
• Who controls the building: Leasehold — ultimately the freeholder, even where day-to-day management is delegated to an RTM company or RMC. Commonhold — the unit owners themselves, via the commonhold association.

Where this is heading

The draft Bill's stated aim is for commonhold to become the default tenure for new flats, via a planned ban on selling new leasehold flats, and to make it realistically possible for existing leaseholders to convert if enough of them want to (GOV.UK). The Housing Minister has said conversion will be possible "if at least 50% of qualifying leaseholders agree" (Housing Minister speech, GOV.UK, 29 April 2026). None of this is law yet: the Bill is still in draft, a House of Commons committee reported on it on 27 May 2026, and the government's formal response — due 27 July 2026 — has been delayed following the Prime Minister's resignation on 22 June 2026, with the Housing Minister confirming the delay on 10 July 2026 (Macfarlanes). The Bill is expected to be formally introduced to Parliament in autumn 2026, with the Committee suggesting Royal Assent by mid-2027 — though the government itself has not confirmed a date (gowlingwlg.com).

Scotland note: Scotland never adopted the English/Welsh leasehold flat model in the same way — most Scottish flats are owned as outright heritable title, with shared repair obligations governed by the Tenements (Scotland) Act 2004. This reform programme applies to England and Wales only.