Commonhold is very much on the policy agenda in a way it has not been for a generation and this time it feels less like a well-meaning nod and more like a serious attempt to rewire how properties like flats are owned, managed, funded, and ultimately valued in the UK.
For those of us working in the UK property market, the changes coming down the track have very real implications.
I see four immediate challenges. The first is that comparables will not be like for like for some time. In a predominantly leasehold world valuers have a reasonably coherent set of reference points. Length of lease, remaining ground rent terms, service charge levels, planned major works, and in recent years building safety considerations all form part of a familiar fabric of decision-making. Commonhold alters that fabric. Instead of valuing a wasting lease the valuer is assessing a freehold unit combined with membership of a commonhold association governed by a community statement and collective decision making which can vary materially from one building to the next.
In practice this means the market will operate in a hybrid phase where transactional evidence is fragmented. Older leasehold stock will continue to trade but under newly constrained economic terms around ground rent. New build stock may begin to emerge as commonhold once policy requirements bite. Transitional structures may appear to keep development pipelines viable. Until there is meaningful volume and history in commonhold transactions certainty will be slower to form and lenders being inherently conservative will tend to price that uncertainty as risk.
The second challenge is that the cost base becomes more behavioural. Leasehold has many flaws but from a valuation perspective it offers clarity around obligation chains and enforcement. Under commonhold incentives shift. Owners collectively control budgets maintenance and long term planning which is, of course, the point of the reform but it introduces governance quality as a variable that matters to value.
Two identical buildings can diverge quite quickly. One establishes sensible reserve funds, transparent procurement and predictable contributions. Another underfunds and avoids difficult decisions and then faces a suddenly fraught call for significant cash from its collective of owners. In a market where affordability remains tight and buyers are increasingly sensitive to ongoing costs, the quality of governance becomes value relevant rather than merely administrative. Credit committees worry less about good intentions and more about who can force what to happen and when.
A third challenge lies in development valuation and funding assumptions. Developers and funders price certainty above almost everything else, including exit velocity, saleability, and the ability to run a building in a way that protects both cashflow and reputation. If leasehold is removed or heavily constrained for new flats the industry must translate sales processes, management handover structures and long term running assumptions into a commonhold framework and those assumptions feed directly into gross development value, absorption rates and discounting.
There is a risk here. Even if commonhold proves over time to be a more robust and consumer aligned tenure the market may initially discount it simply because it is unfamiliar, operationally complex, and harder to explain in a sales suite. Transitional pricing is likely to be pragmatic and cautious.
The final challenge is that dispute risk changes shape rather than disappearing. Leasehold disputes are well understood, revolving around service charges, managing agents, and freeholder behaviour. Commonhold removes some of the misalignment but it does not remove the possibility of disagreement. Instead, it relocates it into collective governance. From a valuation perspective the question becomes whether this reduces risk by aligning interests or introduces new risks around decision gridlock, uneven maintenance and variable reserve discipline. Here, early evidence will matter because lenders will not wait a decade for a perfect dataset to emerge.
For valuers, lenders and investors the practical implication is clear. Commonhold will require a more explicit assessment of governance quality, reserve planning, predictability of contributions, legal clarity and liquidity. None of this is an argument against reform. If anything it underlines that tenure change is not just a consumer rights issue but a reconfiguration of risk. In property markets risk is always priced sometimes quietly and sometimes brutally long before the policy dust has settled.
