The Commonhold and Leasehold Reform Act 2002 was a landmark piece of legislation designed to improve the rights of leaseholders in England and Wales and to create a new system of ownership called commonhold.
While not all of its reforms have been widely adopted, many of the rights it introduced continue to benefit leaseholders today, making it a key milestone in the history of leasehold reform.
⚖️ Key reforms introduced by the 2002 Act
- Right to Manage (RTM)
- The Act gave leaseholders the statutory right to take over the management of their building without having to buy the freehold.
- Through the formation of an RTM company, leaseholders can collectively assume responsibility for services such as maintenance, insurance, and repairs.
- This was a major step in reducing freeholders’ control and giving residents greater autonomy.
- Improved enfranchisement rights
- The Act streamlined the process of collective enfranchisement, making it easier for leaseholders to join together to buy the freehold of their building.
- It also made amendments to the qualification criteria, expanding eligibility for leaseholders.
- Introduction of commonhold ownership
- The Act created commonhold as an alternative to leasehold for flats.
- Under commonhold, each flat owner holds the freehold of their unit, while collectively owning and managing the shared parts of the building through a Commonhold Association.
- In theory, this removes many of the problems associated with leasehold — such as ground rent, lease length, and costly extensions.
🏢 Why hasn’t commonhold taken off?
Despite the potential advantages of commonhold, uptake has been extremely limited since its introduction in 2002. Reasons include:
- Lack of awareness among buyers and developers.
- Reluctance from mortgage lenders to embrace a new system.
- Developers continuing to prefer the leasehold model, which generates income streams through ground rents and lease extensions.
As a result, commonhold remains rare, and leasehold continues to be the dominant form of flat ownership in England and Wales.
📈 Lasting impact for leaseholders
Even though commonhold adoption has stalled, many reforms from the 2002 Act remain highly relevant today:
- Leaseholders continue to benefit from the Right to Manage.
- Collective enfranchisement rules are still shaped by the 2002 Act.
- The legislation forms part of the wider progression of leasehold reform, leading to more recent changes such as the Leasehold Reform Act 2024.
✅ Summary
The Commonhold and Leasehold Reform Act 2002 aimed to rebalance power between freeholders and leaseholders. It introduced the Right to Manage, improved enfranchisement rules, and attempted to launch a new form of ownership through commonhold.
Although commonhold has seen very limited take-up, the Act remains a cornerstone of leasehold reform, with many of its provisions continuing to protect leaseholders today.
At extension.lease, we build on these statutory rights when advising clients on lease extensions, enfranchisement, and management options — ensuring you benefit fully from the protections the law provides.
If you’d like to explore the rights you already have under leasehold reform, we’ll explain your options clearly and guide you through the process.
