Commonhold is presented as a fairer form of flat ownership. Right to Manage (RTM) is sometimes portrayed as a quick way for residents to remove a difficult landlord or managing agent and take control of their building. Both routes require thought, preparation and informed participation.
For mortgage brokers, advisers and lenders clients want to know whether they can buy, sell or remortgage, afford the service charges, understand the risks and avoid becoming trapped in a property they cannot easily move on from.
RTM is about control of management whereas commonhold is about ownership. RTM allows qualifying leaseholders to take over management while their leases remain. Under commonhold, unit owners own their flats and the common parts are run through a commonhold association.
WHAT HAS CHANGED
The Leasehold and Freehold Reform Act 2024 made important changes to RTM which came into force on 3 March 2025.
The permitted proportion of non-residential space increased from 25% to 50%, making more mixed-use buildings eligible. Leaseholders will also generally no longer have to meet the landlord’s professional costs in an RTM claim.
I have seen a marked increase in leaseholders exercising the right. Where service charges are opaque, repairs are slow, insurance is unclear or residents lack confidence in management, RTM can provide greater control now.
But it should not be oversold. RTM does not extend a lease, remove ground rent, buy out the freeholder or create commonhold. It also brings management duties.
The RTM company must deal with budgets, service charges, major works, insurance, records, lease covenants and, in some cases, building safety. Residents should seriously consider appointing a good managing agent.
COMMONHOLD AS A SOLUTION
Commonhold addresses deeper problems that RTM leaves untouched. It removes the wasting asset of a lease, the landlord and tenant hierarchy and ground rents. In short, it aligns those paying for the building more closely with those controlling it.
That is why the Government wants commonhold to become the default tenure for new flats.
The logic is understandable: flat ownership should not depend on a system that many buyers find difficult to understand and which can leave leaseholders paying for a building without enough say over how it is run.
Yet commonhold does not remove repairs, insurance, maintenance or fire safety responsibilities. Reserve funds must still be collected and residents must still agree, disagree, vote, pay and live with the consequences. Its success will depend heavily on owners being engaged and co-operative.
THE LENDING REALITY
For lenders, commonhold remains unfamiliar. Although it has existed in law for more than two decades, take-up has been negligible.
A recent Housing, Communities and Local Government Committee report refers to just 18 commonhold blocks in England and Wales, containing fewer than 200 homes. It cannot become mainstream without acceptance from developers, buyers, lenders, valuers, conveyancers and managing agents.
A lender will want to know whether the commonhold association is properly run, contributions are enforceable, the building is insured, an adequate reserve fund exists and decisions affecting value are visible. These are not objections to commonhold but conditions for a functioning mortgage market.
DECISION MAKING AT A TIME OF CHANGE
The greatest risk for existing leaseholders is delaying action on an assumption. Borrowers with short leases, serious service charge concerns or poor management may be tempted to wait for commonhold reform.
That may be the wrong choice. They need advice on remedies available now, including lease extension, RTM, collective enfranchisement, service charge challenge or information rights. Commonhold may become more accessible but it is not yet the immediate answer to every current problem.
Advice should start with the building, not the policy debate.
What is the lease term? Is ground rent an issue? Are service charges understood? Is there a reserve fund? Are major works planned? Are enough leaseholders willing to participate?
If the problem is management, RTM may be sensible. If it is ownership, lease length or the freehold itself, collective enfranchisement may be more appropriate.
Commonhold matters greatly to the long-term future of flat ownership but these related routes are not interchangeable.
For the mortgage market, the task is to prepare for a period in which leasehold, RTM-managed blocks, share of freehold arrangements and commonhold coexist. Professionals who explain those differences clearly can help borrowers make better decisions.
