The commonhold glossary

Freeholder. The person or company that owns a building and the land it stands on outright and indefinitely. Under leasehold, the freeholder (sometimes called the landlord) grants leases to individual flat owners and typically retains responsibility, directly or via a managing agent, for the structure and common parts — though a Right to Manage company or Resident Management Company can take over day-to-day management without the freeholder losing ownership. Commonhold has no freeholder in this sense: the commonhold association collectively holds that role.

Leaseholder. Someone who owns the right to live in a flat for a fixed number of years under a lease — commonly 99, 125 or 999 years when granted — rather than owning the building or land outright. A leaseholder pays ground rent (where applicable) and service charges, and their interest technically loses value as the remaining lease term shortens, which is why lease extension exists as a process leaseholders can use to add years back on.

Ground rent. A regular payment (traditionally annual) that a leaseholder makes to the freeholder simply for the right to occupy the flat under the lease — separate from, and in addition to, service charges for maintenance. Ground rent has been effectively banned (set at a nominal "peppercorn") for most new leases granted since 30 June 2022 under the Leasehold Reform (Ground Rent) Act 2022, but remains chargeable, sometimes at escalating rates, on leases granted before that date. The draft Commonhold and Leasehold Reform Bill proposes capping these older ground rents at £250 a year, tapering to a peppercorn over 40 years (GOV.UK).

Service charge. The money leaseholders pay, usually to the freeholder or a managing agent acting for them (or, in commonhold, to the commonhold association), to cover the cost of running and maintaining the building — repairs, insurance, cleaning, lift servicing, management fees and similar costs. Service charges are meant to reflect actual costs incurred, and leaseholders have statutory rights to see how the money is spent and to challenge unreasonable charges at the First-tier Tribunal.

Forfeiture. A landlord's legal power, under existing leasehold law, to bring a lease to an end — effectively repossessing the flat — where a leaseholder breaches the lease, most commonly by falling into arrears, historically over debts as small as a few hundred pounds. Because the leaseholder can lose not just the flat but all the equity built up in it, forfeiture has long been criticised as disproportionate. The draft Commonhold and Leasehold Reform Bill proposes to abolish forfeiture for long residential leases entirely, replacing it with a proportionate, court-supervised enforcement process (GOV.UK). Forfeiture has no equivalent in commonhold, because there is no lease to forfeit.

Right to Manage (RTM). A statutory right allowing qualifying leaseholders in a building to take over management of the building from the freeholder — without having to prove any fault or wrongdoing, and without paying the freeholder compensation — by setting up an RTM company. The freeholder keeps legal ownership of the building, but day-to-day management (repairs, service charge collection, choosing contractors) passes to the leaseholders. Current law requires at least half of qualifying tenants to participate, and buildings with more than 50% non-residential floorspace are excluded (Leasehold and Freehold Reform Act 2024, legislation.gov.uk).

Resident Management Company (RMC). A company, often set up when a development was first built, through which leaseholders (sometimes alongside the freeholder) manage the building — similar in practical effect to an RTM company, but arising from the original lease/development structure rather than a statutory RTM claim. Leaseholders are typically shareholders or members of the RMC and can sit on its board as directors, giving them a direct role in decisions on budgets, contractors and major works.

Qualifying leaseholder (also "qualifying tenant"). A leaseholder who meets the legal criteria to take part in collective processes like Right to Manage claims, collective enfranchisement, or (under the draft Bill) commonhold conversion — broadly, someone holding a lease originally granted for a term of more than 21 years, and not, for example, a business tenancy. The specific qualifying rules vary slightly between RTM, enfranchisement and the proposed commonhold conversion route.

Commonhold association. The company, limited by guarantee, that owns and runs a commonhold building on behalf of its unit owners, who are automatically members with voting rights. It performs the functions a freeholder or RMC would perform under leasehold — setting the service charge budget, arranging insurance and repairs, and appointing (or dismissing) a managing agent — but does so as the collective, permanent owner of the building's common parts, with no landlord above it (BBC News).

Peppercorn rent. A rent set at a nominal, non-monetary value — literally "one peppercorn" under the Leasehold Reform (Ground Rent) Act 2022 — meaning it has no real financial value and is not collected in practice. Most new residential leases granted since 30 June 2022 must have ground rent set at a peppercorn, and the draft Commonhold and Leasehold Reform Bill proposes tapering existing ground rents down to a peppercorn over 40 years.

Enfranchisement. The general term for a leaseholder's statutory right to acquire either a longer lease (individually) or the freehold itself (collectively, with other leaseholders in the building) from the freeholder, typically at a valuation reflecting the value of what's being acquired. Collective enfranchisement — leaseholders jointly buying their freehold — is the legal mechanism the draft Bill proposes to route existing leasehold buildings through on their way to converting to commonhold.

Section 20 (major works consultation). Shorthand for the formal consultation process, under section 20 of the Landlord and Tenant Act 1985, that a freeholder or managing agent must follow before carrying out qualifying major works (above a set cost threshold per leaseholder) or entering into a long-term service contract. It requires giving leaseholders notice, allowing them to comment and nominate contractors, and can reduce how much a landlord is able to recover from leaseholders if the process isn't followed correctly.

Head lease. A lease granted directly by the freeholder — as opposed to a sublease, which is a lease granted by a leaseholder (acting as an intermediate landlord) to someone else. In blocks where a management company or intermediate landlord sits between the freeholder and individual flat leaseholders, understanding who holds the head lease clarifies who is actually responsible for what in the management chain.