The UK government's white paper sheds light on its plan to abolish leasehold ownership and introduce a commonhold system, a significant move in the property sector. The paper elaborates on the recommendations given by the Law Commission in 2018 and hints at the future of property ownership in the UK.
Update, September 2026: Following this white paper, the government published the draft Commonhold and Leasehold Reform Bill on 27 January 2026. The Housing, Communities and Local Government Committee reported on it on 27 May 2026, and the final Bill has not yet been introduced to Parliament. Two corrections to the history below: the Leasehold Reform Act 1967 gave rights to owners of leasehold houses, not flats, and the building safety legislation referred to is the Building Safety Act 2022. Read our guide to the Commonhold and Leasehold Reform Bill.
The government has now published its white paper in accordance with its manifesto pledge to abolish Leasehold ownership in favour of a Commonhold system. The paper goes into further contemplation of the recommendations given to it by the Law Commission from its consultation in 2018 and the paper sheds further light on the likely future of property ownership in the United Kingdom.
To best explain the situation, it is worthwhile to understand what has led us to this point. Long leasehold has been the predominant form of property ownership within the most populated cities in the United Kingdom, as it is the virtually the only means by which someone can own a flat (although houses can also be owned under a leasehold). Leases provide a contractual mechanism to govern the sharing of communal parts of buildings and appurtenances, and they carry a structure by which rights and obligations exist between the parties and a regime for expenditure on building maintenance.
Throughout the years, since its advent, Leasehold has been criticised for facilitating an unfair system that heavily favours Landlords’ motivations over that of the Tenants, and as a result, Leasehold law been the subject of continuous reform. Notable examples being the Leasehold Reform Act 1967, which gave rights to owners of leasehold flats to buy the freehold of their buildings; Service Charge limitations introduced in the Landlord and Tenant Act 1985; the preemptive rights for leaseholders to buy their Freehold under the Landlord and Tenant Act 1987; the Leasehold Reform, Housing And Urban Development Act 1993, introducing Enfranchisement rights for flat owners, the introduction of the Right to Manage in the Leasehold Reform and Commonhold Act 2002, and most recently the Building Safety Act 2020 which created continuous liability for developments for and the Leasehold and Freehold Reform Act 2024 which seeks to abolish the ''marriage value" component that pertains to Freehold and lease extension prices (of which most of its provisions are currently not yet implemented).
The aforementioned 2002 Act was also intended to be the introduction of a new form of ownership akin to the American 'Condominium' or Australian 'Strata' systems, which effectively provide flat owners with an indefinite form of ownership, in which there is a uniform regime which allows the flat owners themselves to self-manage democratically.
Commonhold was however largely not taken up, most crucially as it did nothing to incentivise developers to sell their buildings on such a tenure. The government now seeks to 'reinvigorate' Commonhold to effectively replace the leasehold system entirely.
Although not certain, it is likely that the new law, will be similar to the Leasehold and Freehold Reform Act 2024, in that it will just modify existing legislation, since the 2002 Act already lays out the framework for commonhold.
The paper describes the headline reforms are as follows:
Banning the sale of new leasehold flats
The government intends not to ban the use of leasehold until it is confident that a viable alternative, through reformed commonhold, is in place.
To convert existing leasehold to commonhold more easily
Despite that the government wishes for commonhold to completely replace leasehold, it recognises that the Freeholder's reversionary interest still need to be accounted for in this conversion process, which is essentially the purchase price (the 'Premium') that leaseholders have to pay the Freeholder to buy the freehold from them in an Enfranchisement claim.
The current model requires full consent from every party involved: freeholder, leaseholder and every lender. The government wants mirrors the leaseholder consent threshold of Collective Enfranchisement (the right for leaseholders to purchase the Freehold), which is 50%. However, the government recognises that this creates a logistical issue for leaseholders within a block who do not wish to or cannot afford to take part in the conversion (referred to as non-consenting leaseholders) and raises issues around how a block comprised of unit owners, and non-consenting leaseholders can operate effectively.
In order for all leases in an estate to be converted to commonhold, the freehold reversion payment for all the flats would need to be settled. The government has disregarded the law commissions suggestion that it could fund the non-consenting leaseholder's share of the price payable by way of a loan, and therefore the only viable alternative would see a potential mix between commonhold and leasehold estates. Those leaseholders who choose not to participate in conversion are allowed to continue living as leaseholders. However needless to say, this would create a double management situation, that could lead to disharmony; that is unless the reforms find a way to clearly separate and distinguish the managerial functions.
The commonhold association would own the freehold of the building. The previous freeholder would be required to take a leaseback and become the head-lessee for these non-consenting properties. They would be granted a 999-year lease and no further lease extensions would be allowed for non-consenting leaseholders and any ground rent due would continue to be paid to the original freeholder (now an intermediate landlord sitting between the leaseholder and the commonhold association). The former freeholder would also receive an appropriate payment when the lease is purchased as part of the conversion of that flat to commonhold.
How to make commonhold work for all block sizes, in particular blocks of two to three units and large buildings, especially those over 11 metres tall
The government suggests that for micro-commonholds, some of the requirements could be disapplied or made voluntary by the participants. Tall buildings may need to be subject to additional rules
When are these changes likely to be introduced?
The government intend to new Commonhold legislation to be enacted before the end of this parliament (ie likely 2029)
There are many challenges on the horizon for the reinvigoration of Commonhold. The government intends for the benefits of Commonhold to drive the market to adopt this form of ownership. If it leads to an increase in the marketability of these assets, this will certainly incentivise both purchasers and lenders to prefer Commonhold, which may lead to a gradual replacement of leasehold. It is however becoming increasingly clear that it will be difficult for Commonhold to completely replace leasehold, especially as there is still the financial burden that comes with such a conversion. Certainly for the foreseeable future there will be a mixture of both Leasehold and Commonhold in the market and it will be interesting to see how the government intends to navigate these issues.
There are several other matters the white paper discusses, and we will be publishing a new article of those topics in the future. If you have any questions about this subject matter do feel free to get in touch.
This article is general information, not legal advice. Accurate as at 28 September 2026.
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