4. Commonhold Acquisition Cost Estimate

This report provides an estimate for the cost of acquiring the freehold for a 15-unit residential block (built 2012–2014) with leases exceeding 100 years and Zero Ground Rent (Peppercorn Lease).

Moving into this flat took 9 months. The delays caused by Southern Housing's administrative hurdles, Management Information Packs (LPE1), and defective lease clauses made the conveyancing process an absolute nightmare.

Difficulties during property purchase

1. The Purchase Premium (The Land Price)

Because the ground rent is already zero and the leases are over 80 years, there is no "income stream" for the landlord to sell. The price is based solely on the Reversion (the value of the building returning to the landlord in 100+ years).

Estimated Premium Per Unit: £500 – £1,500 (Nominal/Residual Value)
Total Building Premium: £7,500 – £22,500

Analysis

This is the "Goldilocks" scenario. The landlord has no financial incentive to keep the freehold other than management fees/commissions. The purchase price is now a minor fraction of the total project cost.

2. Professional Fees (The "Transaction Costs")

With a zero-premium or low-premium purchase, the Professional Fees become the primary expense. You are still required to pay the freeholder's "reasonable" costs under Section 20 of the Landlord and Tenant Act 1985.

3. The 50% Threshold: The Real Value of the Pending Reform

If the premium is already low, why wait for the Leasehold and Commonhold Reform Bill?

Current Rule: 100% Consent Required

Under current law (as of March 2026), you need 100% consent to convert to Commonhold. If one neighbour is unreachable or disagrees, you are stuck in Leasehold.

The Proposed Change: Majority Rule

The Leasehold and Commonhold Reform Bill (currently in its draft/consultation phase following the 2024 King's Speech) will allow you to convert with just 50% consent — meaning 8 out of 15 units agreeing.

Strategic Advantage

The majority can establish the Commonhold Association and acquire the freehold for the whole building.

4. Valuation & Asset Impact

Marketability

A "Peppercorn Lease" is already good, but "Commonhold" is better. It removes the "Landlord" variable entirely. Statistics from the Commonhold Now advocacy group suggest that as this becomes the de-facto standard, non-commonhold flats may eventually suffer a "leasehold discount."

Control over Lifts/Fire Safety

For a 4-storey building with a lift, the real "value" isn't in the land, it's in the Service Charge control. By removing Southern Housing, you stop the 20-30% "Management Fat" on top of every repair bill.

5. Estimated Total Capital Required

Total Capital: £15,500 – £35,000
Estimated Cost Per Flat: £1,000 – £2,300

Strategic Sequence: RTM is still the priority

Even if Step 2 (Commonhold) is cheap, Step 1 (RTM) is the essential first move.

1. Stop the Bleeding: RTM stops the clock on Southern Housing's current Section 20 works and management fees immediately.
2. Build the War Chest: While you organise the Commonhold paperwork, the savings from RTM can be used to fund the professional fees for the acquisition. If we execute an RTM today, the commonhold conversion in 2027 will be 'free' (entirely paid for from the savings from RTM).

6. A Fairer Financial Structure: Sections & Heads of Costs

One of the greatest flaws of our current leasehold structure is the rigid, historic apportionment of service charges. We are often billed for amenities we do not use, or we are lumped into estate-wide costs (like the £1.2M Section 20B notice) that should not apply to our specific block.

The 2026 Draft Leasehold and Commonhold Reform Bill fixes this by introducing "Sections" and "Separate Heads of Costs" into the Commonhold Community Statement (CCS). When we convert to Commonhold, we get to rewrite the financial rules of the building to be objectively fair.

Separate Heads of Costs (Paying Only For What You Use)

The new commonhold model allows our association to ring-fence specific costs based on who actually benefits from them.

• If only certain flats have access to a specific lift, roof terrace, or parking area, we can create a "Separate Head of Cost."
• Only the owners with access to that amenity will pay for its maintenance, repair, and insurance.
• This permanently eliminates the "Why am I paying for something I don't use?" problem inherent in Southern Housing's current billing model. For example, a head of costs for balconies.

Legislative Framework: Quick Reference