Nothing ever stands still in property management, and now is no different. With the UK rental market poised for yet another shift in its procedures, the Government has signalled it wants to move away from the leasehold system and towards commonhold.
This fundamental change will empower buyers with outright ownership of their properties, while shared spaces will be collectively managed through a commonhold association of the owners themselves. This raises important questions about the operational framework of these commonhold properties, specifically how they are managed and how potential disputes amongst owners are resolved.
The Government announced in March 2025 that it has plans to begin abolishing the “unfair feudal” leasehold system and create a law meaning all new-build flats will automatically become commonhold.
It means buyers will own the freehold of their flat, while a commonhold association, managed by the owners, jointly owns and manages the shared areas.
When a property, such as a flat, is bought in a commonhold, the buyer becomes a ‘unit owner’. All unit owners are entitled to become members of the commonhold association, which owns and manages the common parts of the building or estate. These include the external and structural elements of a building, plus shared areas like roofs, lifts, and external walls.
The commonhold association has at least two directors, which can be unit owners or external professionals. They decide how much money unit owners will need to contribute to cover the costs of repairing and maintaining the commonhold. As well as this, the directors can decide to manage the building or appoint a managing agent to do this on their behalf.
Unit owners can participate in the commonhold association and vote on decisions such as whether to make building improvements or who to appoint as a director.
The commonhold association must have “articles of association” which govern how it operates. These articles, along with the CCS, define how the association is run and the obligations of both the association and unit holders. The articles are prescribed by the Commonhold Regulations 2004 and must comply with the Companies Act 2006.
A rulebook is used to set out the rights and obligations of a unit owner, called the Commonhold Community Statement (CCS). While there is some flexibility to change these rules and update them over time, they are generally standardised across commonhold properties.
If a dispute arises between unit owners, or between a unit owner and the commonhold association, parties must follow the commonhold dispute resolution procedure for commonhold. This is set out in the CCS and should occur before taking any legal action. Doing this encourages parties to engage in communication to resolve disputes rather than going straight to court, reducing the need to go to court.
However, if it is an emergency situation such as the unit owner failing to make a payment, the dispute resolution procedure does not need to be implemented. Instead, the commonhold association can take direct action, which may include contacting the unit owner, issuing notices, and potentially pursuing legal action to recover the outstanding payment.
The impending legislative changes to abolish the leasehold system for new-build flats and introduce a commonhold system represent a step towards reshaping property ownership. By granting individual unit owners the freehold of their properties and establishing a collaborative management structure through commonhold associations, the new framework aims to give greater control to owners.
As this legislation progresses, its impact on the housing market and the experiences of future flat owners will be closely observed.