In November 2025, we explored the growing momentum behind commonhold and why it had firmly returned to the Government’s agenda (access that blog post here). Since then, the Draft Commonhold and Leasehold Reform Bill has been presented to Parliament, setting out in considerable detail how a reformed commonhold system – alongside major leasehold reform – could operate in practice.

This follow-on article takes a deeper look at what the draft legislation proposes, what may change, and what it could mean for freeholders, Residential Management Companies (RMCs), Right to Manage (RTM) companies, developers and leaseholders alike.

As always, our aim is to inform rather than to take sides. The Bill is extensive and technical, but its direction of travel is clear: a long-term structural shift away from traditional leasehold flats and towards a reworked and strengthened commonhold model.

A Brief Refresher: What Is Commonhold?

Commonhold was introduced in 2002 as an alternative to leasehold ownership for flats, but take-up has historically been extremely limited.

In simple terms:

• Each flat owner owns the freehold of their individual unit.
• The shared parts of the building (such as structure, roof, stairwells and communal areas) are owned and managed by a commonhold association – a company set up specifically for that purpose.
• The rights and responsibilities of everyone involved are set out in a legally binding document known as a Commonhold Community Statement.

The Commonhold Community Statement performs a similar function to a lease. It sets out who is responsible for repairs, how costs are shared, how decisions are made and what behaviour is expected within the development.

Unlike leasehold:

• There is no diminishing lease term.
• There is no separate freeholder collecting ground rent.
• Ownership does not “run down” over time.

Instead, the flat owners collectively control and fund the building through the association.

The Government’s position is that the original framework was too rigid and insufficiently attractive to developers and lenders. The draft Bill seeks to address those barriers.

The Structure of the Draft Bill

The draft legislation is wide-ranging. The key parts include:

• Part 1 – Commonhold: A comprehensive rewrite of the commonhold regime.
• Part 2 – New Leasehold Flats: A proposed ban on the grant or assignment of most new long residential leases of flats.
• Part 3 – Ground Rent: Extension of ground rent regulation to certain existing leases.
• Part 4 – Enforcement of Long Residential Leases: Abolition of forfeiture and introduction of a new court-based enforcement process.
• Part 5 – Estate Rentcharges: Regulation of remedies for arrears.

For many in the property management sector, Parts 1 and 2 represent the most significant changes.

A Rewritten Commonhold Framework

Stronger Governance and Structure

Part 1 of the Bill effectively rewrites how commonhold operates. It sets out:

• How land can be registered as commonhold land.
• The creation and legal role of the commonhold association.
• Mandatory requirements for the association’s constitutional documents.
• Detailed rules around voting, director duties and dispute resolution.
• Tribunal oversight in certain circumstances.

There are clearer mechanisms for:

• Removing directors where duties are not met.
• Appointing directors where there are insufficient numbers.
• Correcting defective governing documents.

For RMC and RTM directors, much of this will feel familiar in principle. However, the new framework is more structured and prescriptive, with greater consistency built into the system.

Universal and Local Provisions: The New Two-Tier Rulebook

One of the most important structural changes is the introduction of two categories of rules within the Commonhold Community Statement:

• Universal provisions
• Local provisions

Understanding the distinction is central to understanding how reformed commonhold is intended to work.

Universal Provisions – The Core Framework

Universal provisions are standard rules that will apply automatically to every commonhold development.

They are set by government regulations rather than drafted by developers or advisers. In effect, they form the “core rulebook” of commonhold.

These provisions are likely to govern matters such as:

• Voting procedures and thresholds
• Director responsibilities
• Core financial management requirements
• Budget approval processes
• Reserve fund principles
• Dispute resolution mechanisms
• Basic repair and maintenance obligations
• The process for amending the Commonhold Community Statement

The intention is to create consistency across the sector. This should:

• Reduce drafting errors and unusual clauses,
• Increase confidence for lenders,
• Provide greater clarity for purchasers,
• Create a more predictable governance framework.

For owners, this means the fundamental legal structure of one commonhold development should not be radically different from another.

Local Provisions – Building-Specific Detail

Local provisions sit alongside the universal provisions and deal with the practical, development-specific rules that make each building unique.

They may include:

• The percentage contributions each flat pays towards shared costs
• Pet policies
• Restrictions on short-term or holiday lettings
• Use of balconies or roof terraces
• Parking allocations
• Access arrangements in multi-block estates
• Shared facilities such as concierge services or gyms
• Development-specific safety procedures

In simple terms:

• Universal provisions create the structure.
• Local provisions provide the tailored detail.

Importantly, local provisions cannot generally contradict universal provisions unless regulations specifically allow this. The universal rules therefore provide the backbone of the system.

For managing agents and directors, this approach introduces greater uniformity across developments while retaining flexibility where it is genuinely needed.

Financial Management Under Commonhold

The draft Bill contains detailed provisions governing:

• How commonhold contributions are calculated.
• How percentages are allocated between units.
• How reserve funds are created and managed.
• How financial disputes can be referred to tribunal.

In practice, much of this will feel familiar to those used to service charge management under leasehold. The difference lies in the legal foundation: the financial structure is rooted in a freehold ownership model rather than landlord and tenant law.

For managing agents, budgeting, transparency and compliance remain central, whatever the tenure.

Conversion from Leasehold to Commonhold

Historically, conversion from leasehold to commonhold has been extremely difficult, largely due to the high levels of consent required.

The draft Bill introduces clearer processes concerning:

• Buildings that have undergone collective enfranchisement.
• Required levels of consent from qualifying leaseholders.
• The position of mortgage lenders.
• Tribunal powers to dispense with consent in certain circumstances.

While conversion is still likely to be complex, the framework is more structured and potentially more workable than before.

For freeholders, this introduces a formalised pathway should conversion be pursued. For RMC and RTM companies, it may provide a long-term opportunity to move from management control to a commonhold ownership structure.

A Ban on New Leasehold Flats

Perhaps the most headline-grabbing proposal is the planned ban on the grant or assignment of most new long residential leases of flats.

In practical terms:

• Developers would generally no longer be able to sell new flats on a traditional long lease basis.
• Commonhold would become the default tenure for new flatted developments, subject to limited permitted exceptions.

This represents a significant structural shift for developers and freeholders involved in new-build apartment schemes.

For purchasers, it could mean buying a freehold unit from day one rather than a time-limited lease.

Existing leasehold buildings would not automatically convert. However, over time, the tenure landscape for new developments could look very different.

Abolition of Forfeiture

Another major proposal is the abolition of forfeiture for long residential leases.

Under current law, serious breaches such as substantial arrears can ultimately lead to forfeiture proceedings. The draft Bill proposes replacing this with a new court-based lease enforcement claim process.

The aim is to:

• Remove a long-criticised enforcement mechanism.
• Introduce a more proportionate, supervised court process.
• Provide clearer safeguards for lenders and sub-lessees.

For freeholders and RMCs, this represents a significant shift in how serious breaches may be handled in future.

What Does This Mean for Clients?

Freeholders

• Reduced long-term reliance on ground rent income.
• A structural shift away from new leasehold flat developments.
• Continued management of existing leasehold portfolios under evolving rules.

RMC and RTM Companies

• Potential consideration of commonhold conversion in some buildings.
• Clearer statutory governance structures.
• Ongoing responsibility for compliance, safety and financial management.

Leaseholders and Future Unit-Holders

• A long-term move away from wasting lease terms.
• More standardised governance.
• A revised enforcement framework.

Managing Agents

• The day-to-day management of buildings does not disappear.
• Compliance, fire safety, budgeting, contractor management and resident communication remain central.
• Governance documentation becomes more structured and consistent.

In short, while tenure may evolve, the principles of good property management remain constant.

Key Differences at a Glance

Topic	Current Leasehold Model	Proposed Reformed Commonhold Model
Ownership of flat	Long lease (time-limited)	Freehold unit
Ground rent	Often payable	Not applicable in the same way
Freeholder	Separate legal owner	No traditional freeholder
Governing document	Lease	Commonhold Community Statement
Core rules	Individually drafted leases	Standardised universal provisions
Building-specific rules	Lease clauses	Local provisions within framework
Enforcement	Forfeiture possible	Court-based enforcement claim
New flats	Typically leasehold	Leasehold generally banned

A Period of Transition

It is important to emphasise that this remains a draft Bill. It will go through parliamentary scrutiny, amendment and consultation before becoming law. Implementation is also likely to be phased.

Existing leasehold developments will not automatically change overnight. Many will continue under the current system for years to come, albeit within an evolving legislative environment.

However, for developers planning new schemes, freeholders reviewing long-term strategies, and RMC or RTM directors thinking ahead, this is a moment to understand where the sector may be heading.

Final Thoughts

The Draft Commonhold and Leasehold Reform Bill represents one of the most significant proposed shifts in residential property tenure in a generation. It seeks not simply to refine leasehold, but to rebalance ownership, governance and enforcement across the sector.

For our clients – whether freeholder, developer, RMC or RTM – the key message remains consistent:

Clear governance, financial transparency, compliance and proactive management will continue to define successful developments, whatever the tenure structure. At Levels Property Management, we will continue to provide our expert management and guidance throughout this changing landscape.