How Commonholding Impacts on Collective Enfranchisement

The law around freehold and leasehold interests is old, dating back to the feudal system with over 1000 years of history. However it has been modernised by recent governments and the European Union, out of this modernisation Acts such as the Leasehold Reform Act 1993 and the Commonhold and Leasehold Reform Act 2002.

It is important to be aware of this law if you are a leaseholder whom is considering entering into a collective enfranchisement agreement or wishing to purchase the freehold interest on your building. The concept of commonholding is basically a secondary process created within the freehold/leasehold system. As it is a relatively new concept, the practice is by no means widespread as yet, although commonhold blocks of flats are being created and there is a process in place for tenants interested in freehold purchase to move towards a commonhold scenario through the usual collective enfranchisement means.

Commonholding is essentially a new form of land ownership in England and Wales that applies only to blocks of flats. If a block of flats exists as a commonhold, this means that each individual flat is owned on a freehold basis, which means there are no leases as in the traditional system. Every tenant will own the freehold interest to his/her personal flat, and then the common areas within the building - stairwells, corridors, residents' lounges, gardens and so on - are owned by a Commonhold Association. This company set up is private and limited by guarantee, very similar to that which is set up during the collective enfrachisement process, and it is used to look after the common areas in building. Every tenant residing within the building should be a member of the Commonhold Association.

While the new law was passed in 2002, commonholding did not come into practice until 2004 and its main benefit is that individuals can own the freeholds of their own flats, as opposed to the collective system of freehold ownership established by the 1993 reform Act, in which the freehold is owned by the PLC set up by the residents with the sole purpose of obtaining that freehold. It makes purchasing the freehold simpler and involves having measures against lease abuse. This does mean that buildings can be handled collectively rather than in a dictorial manner by the landlord, this is a good alternative to collective enfranchisement.


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Bonallack & Bishop are specialist collective enfranchisement solicitors. For advice on freehold purchase contact them today. Senior Partner Tim Bishop is responsible for all major strategic decisions at the firm, which he has grown by 1000% in 13 years. Tim sees himself as a businessman who owns a law firm.