What is the difference between commonhold and leasehold?

Full answer

Commonhold and leasehold are two fundamentally different ways of owning a flat (or a house in a shared development), and understanding the distinction matters given the government's stated intention to eventually make commonhold the default tenure for new flats. **Leasehold -- ownership for a fixed term** Under leasehold, you own the right to occupy your property for a fixed number of years (commonly granted as 99, 125, or even 999 years at the outset, though many older leases have far fewer years remaining), after which ownership would technically revert to the freeholder unless the lease is extended. The freeholder (sometimes called the landlord) owns the underlying building and land, and can typically charge ground rent (subject to recent reforms) and service charges for maintaining shared areas, and their consent may be needed for things like alterations or subletting, depending on the lease terms. **Commonhold -- ownership forever** Under commonhold, introduced in England and Wales by the Commonhold and Leasehold Reform Act 2002 but rarely used in practice so far, each flat owner holds their unit outright and permanently (a 'commonhold interest'), with no lease to run down and therefore nothing to extend. There is no external freeholder -- instead, all unit owners are members of a 'commonhold association' (similar in some ways to a residents' management company), which collectively owns and manages the shared parts of the building, such as the roof, stairwells, and grounds. **Why commonhold has been rare** Despite being available for over two decades, commonhold has seen very limited take-up in England and Wales, partly due to lender reluctance (some mortgage providers were historically cautious about lending on commonhold properties), limited awareness, and the fact that most new developments continued to be built and sold as leasehold. Government policy under the Leasehold and Freehold Reform Act 2024 and related announcements aims to reinvigorate commonhold and make it the default tenure for new flats going forward, though this requires further legislation and lender/market confidence to actually shift the market. **Practical implications for buyers today** If you are buying a flat today, it is still overwhelmingly likely to be leasehold, since commonhold developments remain rare -- but the direction of travel means it is worth asking whether a new-build development you're considering is offered as commonhold, and understanding your lease terms carefully (remaining years, ground rent, service charge history) if it is leasehold. **Practical tip** If buying leasehold, check the number of years remaining on the lease (under 80 years can trigger marriage value costs, though this is changing under the 2024 Act) and review at least three years of service charge accounts before committing.

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