Commonhold White Paper: A new direction for homeownership

In response to growing concerns about the leasehold system, the UK government has released the Commonhold White Paper, which seeks to reinvigorate the existing commonhold model of home ownership introduced in 2004.

For various reasons the commonhold model has only been adopted in a limited number of developments. The Government’s new initiative aims to deliver greater security, control, and fairness for property owners in England and Wales. As the government looks to reform the housing market, these changes could have significant legal implications for homeowners, developers, and legal professionals.

The Issues with the Leasehold System

The leasehold model has drawn increasing criticism, with several key issues:

• Escalating ground rents: rising costs have made properties harder to sell or remortgage
• Short leases: properties lose value as leases near expiry, and lease extensions are often costly
• Limited control: leaseholders have little say in property management, which is often controlled by a third party freeholder.

What Is Commonhold?

Commonhold offers a complete alternative to leasehold. Under this model, homeowners own the property unit indefinitely, rather than a fixed length leasehold period with no ground rent involved. A commonhold association, formed by all unit owners in a development, manages shared spaces.

Key features include:

• Full ownership: homeowners own their unit, without lease terms or rent
• Collective management: residents make decisions together via the association
• Long-term stability: ownership is indefinite—no expiring leases or surprise charges.

Key Proposals in the White Paper

The Commonhold White Paper outlines a path forward for adopting this ownership model:

• Encouraging commonhold for new builds: future residential developments should default to commonhold, except in special cases like shared ownership or mixed-use buildings
• Simplifying conversions: proposals include measures to make it easier and more affordable to convert existing leasehold homes to commonhold
• Stronger regulation: the government wants to ensure fair governance and financial transparency within commonhold associations
• Public awareness: education campaigns will help homeowners and developers understand and adopt the model.

Benefits for Homeowners

Commonhold brings several potential advantages:

• More control: homeowners manage the property collectively and control maintenance decisions
• Greater security: no lease expiry or escalating costs
• Fairer costs: transparent and jointly agreed service charges
• Improved resale value: no lease-related barriers to selling.

Challenges and legal considerations

Despite the benefits, transitioning to commonhold can be complex and costly, particularly for large developments. Legal advice will be crucial. Developers and freeholders, who profit from leasehold may also resist the changes. Moreover, collective management may pose challenges in larger communities.

A Step Toward Reform

The Commonhold White Paper marks a significant step toward re-energising homeownership in England and Wales. While it offers homeowners increased autonomy and stability, the road to full adoption will require careful planning, legal oversight, and collaboration across the housing sector.