What is commonhold?

Commonhold is a new type of property ownership in England and Wales, known in other parts of the world as “condominium” or “strata” ownership. Previously there were only two main ways of owning property in the UK - freehold and leasehold.

How does commonhold ownership work?

Commonhold ownership allows you to own an individual flat, house or a non-residential unit such as a shop, within a building or an estate. The commonhold system was introduced to improve the rights of leaseholders who live in multi-occupancy properties, and to avoid some of the problems that arose under the leasehold system.

Property developers can decide whether to make a new development commonhold or leasehold, and current leaseholders can switch to the commonhold system. Some leaseholders may decide to jointly buy the freehold, but for others, particularly those in big blocks with commercial property, commonhold may be a better option.

Under the commonhold system, there is no landlord, and every unit holder in the property has equal rights. Each unit holder effectively owns their own flat as a freehold plus a share in the common structure. All unit holders are jointly responsible for the maintenance and repair of the commonly owned areas. The common areas are owned and managed by a limited company, known as a commonhold association (or “CA”) made up of the owners.

How did the system work for flat owners before the introduction of commonhold?

Prior to commonhold, a leasehold tenure was the only way to have limited ownership of a property which forms part of a larger building. Leasehold ownership is limited by the length of time which the leaseholder can possess the property, whether it's a house or flat. The length of time is specified in the lease itself, after which the property reverts to the freeholder.

What are the advantages of owning a commonhold flat over a leasehold flat?

* The flat will be freehold, and will not lose value as a leasehold flat does as the lease runs down.
* Standardised and transparent documentation, which will avoid inconsistency between leases or problems arising from defective leases.
* Joint ownership and management of the building, with all decisions being made for the benefit of the unit holders by the CA, in accordance with its rules.
* No outside landlords, who only own the freehold for the money they make from tenants.

What are the disadvantages of commonhold?

Developers may prefer to stick with the freehold/leasehold system until they have proof that commonhold properties will retain their value. Leaseholders may be deterred by the fact that the switch process is complicated.

Commonhold also entails the same problems associated with community ownership and living, such as noisy neighbours.


The foregoing summary is provided for information purposes only and is not to be considered legal or business advice. The information may not be complete, accurate or applicable for any particular situation and should not be relied upon.