Commonhold Explained for RTM and RMC Directors
Commonhold is a form of freehold ownership for flats. Each owner holds the freehold of their own unit outright, with no lease and no landlord, and every owner is automatically a member of a commonhold association that owns and manages the common parts. It has existed in law since 2002 and has been used almost nowhere — and the government now intends to make it the default tenure for new flats.
If you are a director of an existing RTM company or RMC, the short answer is that nothing changes for you yet. The longer answer is worth understanding, because the direction of travel affects what your block might eventually become and because leaseholders will ask you about it.
This applies to England and Wales.
What commonhold actually is, in statute
Commonhold is not new legislation. It was created by Part 1 of the Commonhold and Leasehold Reform Act 2002 — the same Act that gave leaseholders the Right to Manage.
Section 1(1) sets three conditions:
"Land is commonhold land if— (a) the freehold estate in the land is registered as a freehold estate in commonhold land, (b) the land is specified in the articles of association of a commonhold association as the land in relation to which the association is to exercise functions, and (c) a commonhold community statement makes provision for rights and duties of the commonhold association and unit-holders (whether or not the statement has come into force)."
Two structures do the work. The commonhold association owns the common parts, and section 34 makes it
"a private company limited by guarantee"
— the same corporate form most RMCs and every RTM company already uses. The commonhold community statement is the rulebook: it sets out the rights and duties of the association and the unit-holders, and it does the job a lease currently does.
The thing to notice is that a commonhold association is not an exotic new entity. It is a company limited by guarantee, run by directors drawn from the owners, responsible for repairing, maintaining and insuring the common parts and for collecting money from owners to pay for it. If you already run an RMC, you already run something structurally similar.
How it differs from what you have now
| Leasehold with RTM | Share of freehold | Commonhold | |
|---|---|---|---|
| What each flat owner holds | A lease, wasting over time | A lease, plus a share in the freehold-owning company | The freehold of the unit, no lease |
| Who owns the common parts | The freeholder | The company the leaseholders own | The commonhold association |
| Does the term run out? | Yes — leases shorten | Yes — leases still shorten unless extended | No |
| Ground rent | Payable under the lease unless a peppercorn | Usually extinguished in practice | None |
| Governing document | The lease | The lease | Commonhold community statement |
| Who manages | RTM company | The RMC | Commonhold association |
The most consequential row is the third. Under leasehold — including share of freehold — the leases still shorten and eventually need extending, which is why lease extension costs matter even in a block that owns its own freehold. Commonhold has no term, so it never has that problem.
The row that matters most day-to-day, though, is the last one. Somebody still has to run the building. Commonhold removes the landlord; it does not remove the work. Our guide to what block management actually involves applies just as much to a commonhold association as to an RMC.
Where the reform has actually got to
Two documents matter, and neither is law.
The Commonhold White Paper, published in March 2025, says the new legal framework
"will be supplemented by a ban on the sale of new leasehold flats, so that commonhold becomes the default tenure"
and, on conversion of existing blocks, that
"our reforms will make it easier to convert an existing leasehold building to commonhold."
The White Paper is explicit that conversion is a choice, not a compulsion, noting that for existing leaseholders "it should be their choice."
The draft Commonhold and Leasehold Reform Bill followed on 27 January 2026 and entered pre-legislative scrutiny before the Housing, Communities and Local Government Select Committee on 4 February 2026. It is a draft. It has not completed its passage, and none of it is in force. Scrutiny stages move — check the Committee's own page for where it has got to before you rely on the position with directors.
So the accurate position to give a leaseholder in 2026 is: commonhold exists in law today, the government intends to make it the default for new flats, the necessary legislation is at draft stage, and nothing about your existing lease has changed.
What this means for your block
Nothing immediate. Your leases are unaffected. Your service charge obligations, Section 20 consultation duties and Companies House filings are all exactly as they were.
Conversion is not a light undertaking. Converting an existing leasehold block to commonhold requires the freehold first — which for most blocks means collective enfranchisement as a preliminary step. The White Paper describes enfranchisement as "the first crucial step." A block that has not bought its freehold is not close to commonhold, whatever the headlines suggest.
The management skill transfers. This is the genuinely encouraging part. Directors who can budget a service charge, run a consultation, produce year-end accounts and hold an AGM already have the skill set a commonhold association needs. The reform changes the legal wrapper, not the job.
Be careful what you promise. The single most useful thing a director can do right now is avoid over-stating the timetable. Leasehold reform has slipped repeatedly. "Commonhold is coming for new flats, the Bill is in draft, nothing has changed for us" is accurate and will not need retracting.
The honest summary
Commonhold fixes real problems: the wasting lease, the ground rent, the absentee freeholder with an interest in charging you as much as possible. It does not fix the problem most self-managed blocks actually have, which is that running a building is a substantial unpaid job and volunteers burn out doing it. Our guide to the common problems facing residents management companies covers those, and none of them are cured by changing the tenure.
If your block is well run today, it will be well run as a commonhold. If it is struggling with arrears, poor records and no reserve fund, commonhold will not fix that either.
LevyBoard is building guided block management software for volunteer directors — service charge accounting, arrears tracking, and Section 20 compliance, designed for people who did not sign up to become property managers.
This guide applies to England and Wales. Scottish and Northern Irish property law differs significantly. This is general information, not legal advice. The commonhold reform position is moving — the Bill was at draft stage when this was written, so check the current parliamentary status before relying on any timetable. For advice on a specific block, contact a solicitor specialising in leasehold law or the free service at the Leasehold Advisory Service (LEASE).
Sources
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