5. Commonhold Conversion

Right to Manage gives us control. Commonhold gives us ownership.

Commonhold is a form of freehold ownership designed for multi-unit buildings. Instead of leases with ground rent and service charges, each unit owns:

• 100% freehold interest in their flat
• Proportional share in the common parts (hallways, roof, structure)
• Voting rights in the Commonhold Association (the residents' corporation)

There are no landlords, no ground rent, and no lease decay. The building is collectively owned and governed by the people who live in it.

Why Commonhold Was Broken (Until 2026)

The UK introduced commonhold in 2002, but it failed spectacularly because:

1. 100% unanimous consent was required - One holdout could block conversion
2. Mortgage lenders refused to recognise it - Made flats unmortgageable
3. No forced buyout mechanism - Freeholders could refuse to sell

As a result, only 20 commonhold buildings exist in the entire UK.

The Leasehold and Commonhold Reform Bill (currently in Parliament) fixes all three problems:

• 50% majority rule for conversion (down from 100%)
• Mandatory lender acceptance - Banks must treat commonhold as equivalent to freehold
• Statutory buyout right - Freeholders can be compelled to sell at capped rates

The Conversion Pathway

For a 15-unit building already under RTM, commonhold conversion has two steps:

Step 1: Freehold Acquisition

The RTM company exercises its statutory right to purchase the freehold from Southern Housing. Because our ground rent is peppercorn (£0), the freehold has almost no market value. Estimated cost: £15,500 – £35,000 for the entire building, or £1,000 – £2,300 per household.

Step 2: Commonhold Conversion Vote

Once the freehold is owned by the RTM company, the leaseholders vote (8 out of 15 required for 50% majority) to dissolve the RTM structure and convert to a Commonhold Association.

The leases are extinguished. Each household receives a freehold title to their unit and a membership share in the Commonhold Association.

Conversion Action Plan

Why spend ~£2,000 to buy the Freehold? (The ROI)

If Right to Manage (Step 1) already gives us control of the budget and the contractors, why should we spend an estimated £1,000–£2,300 per flat to convert to Commonhold?

Because RTM fixes the management, but Commonhold fixes the asset. Here is exactly what that one-time payment buys you:

1. Instant Equity and Zero Depreciation

A lease is fundamentally a wasting asset—a very long, very expensive rental agreement. As the years tick down, the value drops.

• By converting to Commonhold, your lease is destroyed and replaced with a permanent Freehold Title. The countdown clock is smashed.
• Freehold/Commonhold properties typically command a 10% to 30% premium over equivalent leasehold flats because buyers are desperate to avoid housing associations. A 10% bump on a £400,000 flat is £40,000 in equity. You are paying £2k to unlock £40k.

2. The End of the Conveyancing Nightmare

Leasehold conveyancing is notoriously glacial because solicitors have to request "Management Information Packs" (LPE1 forms), Deeds of Covenant, and Notices of Transfer from housing associations like Southern, who often take weeks to reply and charge excessive fees for the privilege.

• The Commonhold Fix: Under the new legislation, all of this is replaced by a single statutory document—the Commonhold Unit Information Certificate (CUIC). By law, this must be provided within 14 days and the fee is legally capped at £50. Buying and selling becomes radically faster and cheaper.

3. Absolute Freedom (Alterations & Subletting)

Under our current leases, Southern Housing dictates what you can do inside your own home.

• No more "Licence to Alter": Want to knock down an internal non-structural wall or change your layout? In a leasehold, you have to beg Southern for permission and pay them hundreds of pounds for a "Licence to Alter." In Commonhold, it's your freehold. You just do it.
• Freedom to Rent at Will: You no longer need to seek permission, pay sub-letting registration fees, or navigate restrictive lease clauses just to rent out your own property.

4. Drastically Cheaper Than a Lease Extension

Eventually, every leaseholder has to extend their lease or their property becomes unmortgageable. A statutory lease extension can easily cost between £5,000 and £20,000+ per flat in premiums and legal fees. Paying ~£2k now buys the freehold outright, meaning you will never have to pay for a lease extension again.

5. The Abolition of Forfeiture

In the leasehold system, the landlord holds a medieval trump card: "Lease Forfeiture." If you withhold service charges due to a genuine dispute, Southern Housing can legally threaten to seize your entire flat over a £350 debt. Commonhold completely abolishes forfeiture, replacing it with a modern, court-oversighted debt recovery system. No housing association can ever threaten to take your home again.