Commonhold

Commonhold ownership provides a permanent, freehold interest in a flat or apartment, along with joint ownership and management of shared areas like corridors, gardens, and roofs. It removes many of the disadvantages of leasehold ownership, such as ground rent charges and lease expiry.

Commonhold offers flat owners greater control, transparency, and long-term security without the need for lease renewals or dealing with external landlords. It is seen as a fairer system of ownership for multi-unit buildings.

Ownership Structure: Individual ownership of a unit plus collective ownership of shared areas through a Commonhold Association.

No Lease Expiry or Ground Rent: Owners are not bound by a lease term and are free from ground rent or escalating service charges imposed by a freeholder.

Shared Management Responsibilities: Owners jointly manage and maintain communal spaces, requiring cooperation and decision-making through the Commonhold Association.

Freehold: Full ownership of a property and the land it sits on, with no lease or external ground rent obligations.

Leasehold: Ownership of a property for a set period under a lease agreement, often involving ground rent and service charges.

Commonhold Association: A company made up of all commonhold unit owners, responsible for managing shared areas and setting service charges.

Advantages: Commonhold ownership offers permanent ownership without lease extensions, ground rent, or external landlord control. It provides greater transparency, lower long-term costs, and collective decision-making for managing shared spaces.

Disadvantages: Successful commonhold ownership relies on strong cooperation between owners to manage communal areas effectively. It is also less common in the UK market, with fewer mortgage options currently available compared to leasehold.

Investors may find commonhold ownership appealing because it removes risks associated with lease decay and unpredictable service charge increases. However, the success of a commonhold investment often depends on how well the owners manage the property collectively.

Scenario: An investor purchases a commonhold apartment in a modern city-centre development, confident that their ownership is permanent and they have a say in management decisions, with no concerns over lease renewals or hidden charges.

What is the difference between commonhold and leasehold?

Commonhold offers permanent ownership without a lease, while leasehold provides time-limited ownership with potential ground rent and service charges.

Is commonhold the same as freehold?

Commonhold is a type of freehold ownership specifically designed for multi-unit buildings like flats, where communal areas are jointly owned and managed.

How are service charges handled in commonhold?

Service charges are set and agreed upon collectively by all owners through the Commonhold Association, rather than by an external landlord.

Will commonhold become more common in the future?

Government reforms aim to promote commonhold as the standard for new flats, so it is expected to become more widespread in coming years.

In the UK, most houses are freehold, with over 80% of UK homes falling under this category. Freehold properties tend to maintain higher resale value compared to leasehold properties due to their long-term ownership benefits and lower ongoing costs.